A new government-backed loan scheme launches to provide additional finance to those businesses that need it. The scheme is offering loans of as much as 10 million pounds to businesses, the Treasury said.
The government is providing an 80% guarantee for all loans, and interest rates have been capped at 14.99% — though they’re expected to be much lower in most cases. The program runs until the end of the year and replaces various emergency-loan ones that have distributed more than 75 billion pounds since the pandemic began.
With non-essential retail and outdoor hospitality reopening next week, Ministers have ensured that appropriate support is still available to businesses to protect jobs.
The Chancellor of the Exchequer, Rishi Sunak, said “We have stopped at nothing to protect jobs and livelihoods throughout the pandemic and as the situation has evolved we have ensured that our support continues to meet businesses needs.”
“As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis.”
The scheme, which was announced at budget and runs until 31st December 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders. 26 lenders have already been accredited for day one of the scheme, with more to come shortly, and the government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, and Ministers are urging lenders to ensure they keep rates down to help protect jobs. The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year.
Business Secretary Kwasi Kwarteng said “We’re doing everything we can to back businesses as we carefully reopen our economy and recover our way of life.”
“The launch of our new Recovery Loan Scheme will provide businesses with a firm foundation on which to plan ahead, protect jobs and prepare for a safe reopening as we build back better from the pandemic.”
Commenting on the Recovery Loan scheme, Rain Newton-Smith, CBI Chief Economist, said “The coronavirus loan schemes have provided a critical lifeline to businesses, and so its successor – the new Recovery Loan scheme – comes as a huge relief to firms.”
“These loans can be taken alongside existing COVID loans to help firms refinance, restructure and go for growth. It’s vital support remains as restrictions relax and demand returns to normal, allowing businesses to recover, save jobs, and support for reopening.”
Suren Thiru, Head of Economics at the BCC, said “Accessing finance remains crucial to the lifeblood of a business and so the launch of the Recovery Loan scheme is welcome. The new scheme can play a potentially pivotal role in supporting the recovery by getting credit flowing to the firms who most need it. Chambers of Commerce will continue to work with government and the banks to ensure that businesses have the clarity they need to enable them to use the new scheme to help them return to growth.”
David Postings, Chief Executive of UK Finance, said “The banking and finance industry remains committed to supporting businesses of all sizes through the next phase of the pandemic response. As focus turns to economic recovery, we know that many firms are still facing uncertainty. The new Recovery Loan Scheme, alongside other commercial financial support, will help firms rebuild and invest for future growth.”