- Scheme supporting access to finance for small businesses
extended for two years
- Major backing for businesses facing increased pressures on
company finances
- Nearly 19,000 businesses supported since the scheme launched
in April 2021
A vital support scheme offering Government-backed loans to small
businesses will be extended for a further two years, Business
Secretary has announced today
(Wednesday 20 July).
The Recovery Loan Scheme, originally launched in April 2021 to
help businesses recovering from the Covid-19 pandemic, has
supported almost 19,000 businesses with an average of £202,000 in
support.
The Recovery Loan Scheme (RLS) is a government scheme aimed at
supporting access to finance for UK businesses. It gives lenders
a government-backed guarantee against the outstanding balance of
the facility.
The extension provides further government support for businesses
grappling with cost pressures and adds to measures already
announced by the Chancellor, such as increasing the Employment
Allowance, slashing fuel duty, and introducing a 50% business
rates relief for eligible high street businesses.
Business Secretary said:
“Small businesses are the lifeblood of the British economy, which
is why we are determined to support our traders and entrepreneurs
in dealing with worldwide inflationary pressures.
“The extension of the Recovery Loan Scheme will help ensure we
continue to provide much-needed finance to thousands of small
businesses across the country, while stimulating local
communities, creating jobs and driving economic growth in the
UK.”
Chancellor of the Exchequer, , said:
“Small businesses are the engines of economic growth, supporting
jobs and livelihoods in communities right across the UK.
“The Recovery Loan Scheme has supported thousands of businesses
over the past year and this extension will ensure they continue
to access the finance they need to navigate the months ahead.”
The scheme has supported over 16,000 English businesses, as well
as 1,000 businesses in Scotland, 600 Welsh businesses and 300 in
Northern Ireland.
Examples of businesses which have benefited from the scheme
include Leeds-based firm Wildfire Marketing, which used the loan
to take on new employees to help the business grow, and White
Light Ltd, a lighting firm which required finance to purchase new
equipment for the latest West-End shows.
The principle behind the extended Recovery Loan Scheme remains
unchanged: government will underwrite 70% of lender liabilities,
at the individual borrower level, in return for a lender fee.
Lenders must ensure that the benefits of the government guarantee
are passed through to businesses.
The maximum loan size remains at up to £2m. However, recognising
that businesses and the UK more generally are now in a better
position than they were during the pandemic, lenders may now
require a personal guarantee from the borrower, in line with
standard commercial practice.
Chris Wilford, CBI Director of Financial Services Policy,
said:
“Amidst challenging economic headwinds and continued cost
pressures, this remains a difficult time for business.
“With cashflow difficulties at the forefront of the minds of many
business owners, continued access to Government-backed loans will
bring great comfort.
“This next phase of the Recovery Loan Scheme will provide a
critical lifeline for firms. The CBI will also continue to work
with Government and lenders on ensuring businesses have access to
the finance they need to go for growth.”
Shevaun Haviland, Director General of the British
Chambers of Commerce, said:
“After two years of pandemic disruption and with a faltering
global economy, the BCC has been calling for this continued
financial support for firms. The two-year extension to the
Recovery Loan Scheme will be a lifeline for many businesses
facing a rising tide of costs.
“It is now essential that businesses in need of this extra
support can access the scheme as quickly as possible to make sure
they get help before it’s too late.”
