Recovery Loan Scheme
Where CBILS was designed to help business that had in some way been affected by the pandemic, the RLS is more focused on helping them recover.
The RLS is geared towards helping business that were affected by the restrictions imposed due to the pandemic, but have a clear chance of long-term survival with adequate finance in place. This is self certified by ticking a box as opposed to having to prove it!
Can you have RLS if you already have CBILS borrowing?
Yes, you can combine RLS with CBILS with both facilities being separate i.e. you don’t have to settle your CBILS loan with your RLS facility. However some lenders are offering up to a 12 month interest only period so with repayments starting to be due on CBILS loans you could replace with an RLS loan to maximise your cash flow.
What companies are eligible?
All companies are eligible with the only exclusions being banks, insurance companies and public sector bodies.
There are no turnover restrictions with RLS. You will need to self-certify that the business has been affected by the pandemic e.g. lost revenue, impacted cash flow etc.
The focus is now on supporting viable growth and this can be interpreted widely enough to allow most business to apply.
What facilities are available?
RLS covers loans, overdrafts, asset finance, invoice finance and property finance.
Facility sizes will start at £1000 for invoice finance and asset finance and from £25,001 for loans and overdrafts.
The maximum facility is generally 25% of turnover with CBILS but not Bounce Back loans included in this amount, however some lenders offer flexibility as there is allowance for self-attested turnover (especially useful if using the loan for acquisitions).
The maximum advance to a business is £10m and up to £30m if a group of companies.
The minimum length of any facility is 3 months, with invoice finance and revolving credit lines having a maximum period of 3 years and asset finance and loans up to 6 years.
How is the government supporting?
The government is supporting by guaranteeing 80% of the loan – the idea is that lenders will grant credit approvals which they wouldn’t otherwise do if not for the support. This also means that normal conditions could be stretched e.g. if a bank normally restricted property lending to 70% of value they may now do 100%+ as long as at the end of the loan period (6 years max.) the balance was within their normal criteria).
Unlike CBILS you will need to pay any interest and fees (up front fees can’t be more than 5% of the facility amount). Interest rate will be aligned with risk profiles the British Business Bank agrees with lenders, but can’t ever be more than 14.99%.
How is an application assessed ?
Lenders will all have different lending criteria, but all will be needing to prove the business is viable, albeit they can overlook short term performance due to the pandemic. They will be looking at historic accounts, bank statements, future prospects and the people running the business.
Borrowing can be for any legitimate purpose
Lenders will be taking a view on the underlying strength of the business and how they would recover funds in the event of a default and in particular for lending under £250,000 where personal guarantees can not be taken.
How long does the scheme run for?
Currently the scheme is running until 31st December 2021, but lenders can run out of their allocation of funds so you should act quickly if you want to secure a facility.
What is SME Business Finance’s role?
SME are a whole of market broker which means we have access to many different RLS lenders including banks, P2P lenders and independents, these lenders all have different criteria and we match up an individual company’s circumstances with the most appropriate lender to maximise on the chance of a successful outcome.
Our service is free to you as the lenders pay us a fee for packaging the deals up, so the cost is exactly the same if approaching lenders direct or going via us and benefiting from our expertise.