COVID Recovery Loan scheme extended to June 2022

The Recovery Loan Scheme which supports access to finance for UK businesses as they grow and recover from the disruption of the pandemic has been extended by six months to 30 June 2022.

The extension to the scheme was announced in the 27 October 2021 Budget.

It currently allows UK trading businesses of any size to access loans and other kinds of finance so they can recover after the pandemic.

Up to £10 million is available per business, although the actual amount offered and on what terms is at the discretion of participating lenders who are listed on the British Business Bank's website.

The government guarantees 80% of the finance to the lender, but the borrower is 100% liable for the debt.

To be eligible, a business needs to show that it has been adversely affected by the pandemic and would be viable were it not for that. It also has to show that it is not in insolvency proceedings.

Business can still access the Recovery Loan scheme even where they have received support under an earlier COVID-19 guaranteed loan scheme.

What businesses can receive under the scheme

• term loans or overdrafts of between £25,001 and £10 million per business
• invoice or asset finance of between £1,000 and £10 million per business

No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.

The maximum length of the facility depends on the type of finance applied for and will be:

• up to 3 years for overdrafts and invoice finance facilities
• up to 6 years for loans and asset finance facilities

Changes from 1 January 2022

In the Autumn Budget 2021, the Chancellor announced that the Recovery Loan Scheme would be extended until 30 June 2022.

From 1 January 2022, the following changes will come into force:

• The scheme will only be open to small and medium sized enterprises
• The maximum amount of finance available will be £2 million per business
• The guarantee coverage that the government will provide to lenders will be reduced to 70%
• These changes will apply to all offers made from 1 January 2022.

An accredited lender for Recovery Loans can be found from the list on the British Business Bank website.

Further help available

If your business requires a review and some possible restructuring in order to be more effective and efficient, please contact our Restructuring Team for a conversation.

You can also check out our articles and guides in our Restructuring Knowledge Hub.