Business secretary Kwasi Kwarteng confirmed earlier this week that the government-backed loans to small businesses would be extended for a further two years.
The Recovery Loan scheme was launched in April 2021, reportedly supporting nearly 19,000 businesses recovering from the impacts of the Covid-19 pandemic with an average of £202,000 provided in support.
The scheme provides lenders with a government-backed guarantee against the outstanding balance of the loan. It is believed that providing continuous financial support to thousands of small businesses across the country will stimulate local communities, create jobs, and drive economic growth.
You can apply for a loan if your business is trading in the UK and you can show that your business would be viable were it not for the pandemic, has been adversely impacted by the pandemic, and is not in collective insolvency proceedings.
Businesses from any sector can apply except:
banks, building societies, insurers and reinsurers.
state-funded primary and secondary schools
The principle behind the scheme remains unchanged: the government will underwrite 70% if lender liabilities, at the individual borrower level, in return for a lender fee. However, as most businesses are generally in a better situation now than during the pandemic, lenders may now require a personal guarantee from the borrower
The chancellor, Nadhim Zahawi, said:
“Small businesses are the engines of economic growth, supporting jobs and livelihoods in communities right across the UK."
“The Recovery Loan Scheme has supported thousands of businesses over the past year and this extension will ensure they continue to access the finance they need to navigate the months ahead.”
Further information on the Recovery Loan Scheme can be found here.