The Recovery Loan Scheme (RLS) is to be relaunched in August for a two year period, with a few minor changes, the Government has announced.
The Department for Business, Energy & Industrial Strategy (BEIS) have confirmed that the RLS will be extended for another two years.
Exactly how it will operate will be revealed in August. However, lenders will be expected to request personal guarantees (PG) from business owners under the new scheme. Personal guarantees were asked for in the RLS but the directors main residence was excluded from any potential claim. It remains to be seen exactly what form the PG will take.
The British Business Bank (BBB) reported that more than £4.5bn had been lent to UK small businesses under the RLS. 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 BEIS said that the the government will continue underwriting 70 per cent of lender liabilities 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 will continue to be £2m. However, lenders may now request a personal guarantee from the borrower, which the BEIS believes is “in line with standard commercial practice”.
“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,” said business secretary Kwasi Kwarteng.
“The extension of the RLS 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.”