On 6th April 2021 the government launched the Recovery Loan Scheme (“RLS”), the next stage of its financial support for businesses impacted by COVID-19. The RLS replaces the Coronavirus Business Interruption Loan Scheme (“CBILS”), the Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) and the Bounce Back Loan Scheme (“BBLS”), which all closed for new applications on 31st March 2021.
A few of the key distinctions between the RLS and the CBILS, CLBILS and BBLS are:
there is no interest free period and so a borrower will need to be able to afford the payments as soon as they complete the loan;
the government is no longer paying the fees associated with a loan (for example, the payment of an arrangement fee or legal fees);
loan terms are between one to six years; and
a borrower can borrow between £1,000 to £10,000,000 (which is subject to a maximum cap of £30,000,000 across a borrower’s group).
A list of the British Business Bank’s FAQs is contained here (which includes details of the eligibility criteria). The eligibility criteria for the RLS, if it is like the existing financial support schemes, has the potential to change over time but where a borrower has a CBILS, CLBILS or BBLS then they will (subject to it impacting the amount they can borrow under the RLS) also be eligible to apply under the RLS.
The Clarion Banking and Finance team have advised borrowers and several lenders on the terms of CBILS and CLBILS since the start of the COVID-19 pandemic and are happy to answer any queries in relation to the RLS or any of the existing financial support schemes.
This article is correct as at the date of writing on Wednesday 7 April 2021.
Disclaimer: Anything posted in this blog is for general information only and is not intended to provide legal advice on any general or specific matter.