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Rishi Sunak set to extend the UK’s Recovery Loan Scheme until June 2022

The six-month extension comes as the scheme passes £1bn lending milestone.

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Rishi Sunak/The Treasury/Flickr.

Chancellor Rishi Sunak is expected to delay the closure of the UK’s emergency lending guarantee for small businesses until the second half of 2022.

Initially, the Recovery Loan Scheme (RLS) had been set to close to new applicants on 31 December; however, on Wednesday, Sunak will extend this to 30 June 2022.

Administered by the British Business Bank, the RLS includes a government-backed guarantee on business loans from £25,000 up to a maximum of £10m, with interest rates capped at 14.99 per cent.

Lisa Jacobs, UK managing director at RLS-accredited lender Funding Circle, welcomed news of the extension, which she said: “has provided small businesses with invaluable finance at a crucial time.”

“Many of the UK’s SMEs are optimistic about their future, with a third telling us they intend to expand over the coming year. Finance is the key to unlocking these growth plans, and we look forward to continuing helping businesses access the scheme, create jobs and drive the economic recovery.”

This morning the British Business Bank published data for the first time on the uptake of the RLS, showing that just £1.06bn worth of loans had been extended to some 6,200 businesses (actual drawdown figures were lower, with just £822.8m of lending being used).

That compares to CBILS and BBLS which helped facilitate over £80bn in small business lending throughout 2020 and early 2021.

“Businesses up and down the country are beginning to look beyond the pandemic towards the opportunities available to them in the recovery. The British Business Bank is committed to supporting smaller businesses in accessing the finance they need to grow sustainably in the future," said the bank's CEO Catherine Lewis La Torre.

"In meeting the £1bn milestone, the Recovery Loan Scheme is demonstrating its impact by helping thousands of companies to fund their further development.”

The RLS was also criticised for the slow speed at which lenders were accredited, despite many lenders having already been accredited for CBILS and BBLS.

On Wednesday, Sunak is also expected to add £312m to the British Business Bank’s Start-Up Loans programme, which equates to loans for an additional 33,000 entrepreneurs to start or grow their businesses.

Read more:Which fintechs are offering government-backed Recovery Loans?

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