The British government has announced a new Recovery Loan Scheme to help small businesses get back on their feet after the pandemic. The scheme will provide loans of up to £10 million, with interest rates capped at 14.99%.
The government will also guarantee 80% of the loan value, making it easier for businesses to access the funding they need.
The scheme will replace the Bounce Back Loan Scheme, which is due to expire in April 2021.
The new scheme will be open to all businesses that are struggling as a result of the pandemic, including those that have already received a Bounce Back Loan. The government has also announced a range of other measures to support businesses, including a extension of the furlough scheme and a business rates holiday.
With these measures in place, businesses can start to recover from the pandemic and get back to normal.
What is a Recovery Business Loan?
A recovery business loan is a type of financing that is provided to businesses that are experiencing difficulty repay their debts. This type of loan is typically used to help businesses restructure their debt so that they can avoid defaulting on their obligations. Recovery business loans can be used to pay off creditors, invest in new equipment, or hire additional staff.
In most cases, recovery business loans are provided by banks or other financial institutions. However, there are also some private lenders who specialize in providing this type of financing. When choosing a lender, it is important to compare interest rates and terms so that you can find the best possible deal.
How do Recovery Loans work?
Recovery Loans work by offering a fixed term loan businesses that have been impacted by the Covid-19 pandemic. The loans are designed to help businesses recover from the financial challenges that they have faced over the past year. Recovery Loans are available through a number of different lenders, including banks, credit unions, and online lenders. The loans can be used for a variety of purposes, including working capital, inventory, and equipment purchases.
A Recovery business loan typically have lower interest rates than traditional business loans, and they can be repaid over a longer period of time. This makes them more affordable for small businesses that are struggling to make ends meet. If you think a Recovery Loan could help your business, contact your local lending institution to learn more.
The loan terms can range from three years to six years depending on the type of funding used. You have a choice of:
- Term loans and overdrafts of between £25,001 and £10 million per business
- Invoice finance and asset finance of between £1,000 and £10 million per business
The loans work as same as the Bounce Bank Loans and The Coronavirus Business Interruption Loans with a number of lenders joining the scheme.
If you opt to take a term loan or asset finance, the terms will be up to six years. Both overdrafts and invoice finance will run for up to three years.
Lenders cannot demand directors to sign personal guarantees for loans under £250,000. If you require borrowing of over £250,00 your Principal Private Residence cannot be used as security.
Eligibility for the Recovery Loan Scheme?
Lenders require the following eligibility requirements for Recovery Loans:
- Must be trading in the UK
- Being adversely affected by coronavirus
- Being otherwise viable for the future
- Not being in any type of insolvency procedure
The Recovery Loan Scheme is available to businesses of any size that meet these criteria. It allows businesses in all industries to evolve and prosper post-coronavirus via this funding solution.
Businesses can apply for a Recovery Loan if you have already received a different form of government coronavirus funding. unlike other coronavirus loan schemes there are no interest-free period with the Recovery Loan. You will also be required to pay associated fees.
The scheme is set to end on 31st December 2021, so how do you apply for this type of finance?
Read more: Refused funding, what is the next step?
How to apply for a Recovery Loan
Applying for a Recovery Loan is easy. The first step is to fill out the online application form, which will take just a few minutes. Once you have submitted the form, a lending specialist will review your information and determine if you are eligible for a loan, a list of lenders will be available on the British Business Bank website.
If you are approved, you will then be able to choose your loan amount and repayment terms. The entire process can be completed online, and you can typically receive your funds within 48 hours.
So if you’re in need of financial assistance, don’t hesitate to apply for a Recovery Loan today.
Our partner lead team can offer help and assistance and offer recovery business loan information to business owners simply get in contact.
Lee Jones is a seasoned expert in the field of business finance with over two decades of experience. With a keen understanding of financial markets and a passion for helping businesses thrive, Lee has become a trusted advisor to countless companies across the United Kingdom.