The team at Assetz Capital, a marketplace lending platform originating secured loans, notes that after the end of the previous COVID-19 loan schemes, the UK Government launched the new Recovery Loan Scheme (RLS).
Assetz Capital was accredited to lend via the RLS scheme on July 21, 2021. The company recently shared some of the features and eligibility criteria to help you decide whether it’s appropriate or a good fit for your business or your client.
While explaining how the Recovery Loan Scheme (RLS) actually works, they noted that the scheme launched on April 6, 2021 ”provisionally running until December 31, 2021 (subject to review) and is a government scheme to help small, medium, and large UK businesses affected by coronavirus to access finance as they recover and grow.”
Under the scheme, the UK government offers an 80% guarantee to the provider, but it’s worth noting that the business “remains liable for the full loan amount.”
As explained by Assetz Capital:
“Finance can be used for any legitimate business purpose, such as managing cash flow, investment and growth. It’s designed to support businesses that can afford to take out additional finance for these purposes. Under the scheme, lenders are able to provide facilities of up to £10m to SMEs with a government-backed guarantee against the outstanding balance of the facility.”
As mentioned by the firm, a key aim of the Recovery Loan Scheme is “to improve the terms on offer to businesses, but if a lender can offer a business the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.”
Providers can provide as much as £10 million across facilities like term loans, overdrafts, invoice finance and asset finance, the Assetz Capital team noted while adding that it is important “to be aware that a business can only borrow up to 25% of its annual turnover.”
As mentioned in a blog post by Assetz, businesses who have taken out a Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) or Bounce Back Loan Scheme (BBLS) facility are able “to access the new scheme which will run until 31 December 2021, (subject to review).”
If you’re approved for a Recovery loan, you will be liable “to pay the RLS interest payments and fees from the outset” and the guarantee is “to the lender and not to the business,” the Assetz team noted.
You may apply for a recovery loan to:
- Access cash flow
- Purchase equipment
- Help with payroll
- Grow your business
- Pay a one-off cost
- Invest in marketing
(Note: To learn about the eligibility criteria and other pertinent details, check here.)
While commenting on how to apply for a Recovery Loan Scheme backed facility at Assetz Capital, the company noted:
“When you apply for finance from RLS through Assetz, you’ll need to provide certain evidence to show that you can afford to repay the RLS-backed facility.”
This is “likely” to include the following:
- Management accounts
- Business plan
- Historic accounts
- Details of assets
Decision-making on whether a business is eligible for RLS is “fully delegated to the British Business Bank’s accredited RLS lenders,” the company clarified.
Addressing a question about whether to apply for the Recovery Loan Scheme even if you’ve already have a CBILS loan or Bounce Back loan, the company noted:
“Yes, you can get a Recovery loan if you have a Government scheme loan already, and there is no requirement to refinance any existing Government debt such as a Bounce Back loan. The maximum you can borrow is 25% of your annual turnover, and this cap includes any outstanding debt under the CBILS, CLBILS or RLS schemes. However, Bounce Back loans are not included in this limit.”
They also mentioned that with a Recovery Loan, your repayments will “start straight away” and “how long you get to repay the loan depends on the type of finance you take out.”
For development finance, you have “up to 2 years to repay and with commercial mortgages, you have up to 5 years,” the Assetz Capital team noted.
Check here for additional information.