The Treasury is considering extending its Recovery Loan Scheme (RLS) beyond the December 31 deadline.
However, according to The Daily Telegraph, the terms in the renewed scheme would be less favourable for businesses. Potential alterations include reducing the government guarantee to cut down on possible losses that taxpayers could face from unpaid debt.
As it stands, the government insures 80 per cent of the loans, which are between £25,000 and £1m.
Officials are said to be talking to banks over the next month to decide whether to adjust the terms. It’s being discussed ahead of the Budget later this month but a decision by ministers could arrive later.
RLS was launched on April 6 as a follow-on from the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan scheme (BBLS). Its purpose is to help businesses recover from the pandemic. It was made clear at the time that the deadline would be the end of the year, subject to a review.
The loan was delivered by a number of financial providers but there was less take up because of the scheme’s commercial terms. Many applicants have been denied a loan because their company’s turnover value wasn’t high enough, because of their credit rating or because they have a Bounce Back Loan. Find out more by reading Failings revealed in Covid Recovery Loan Scheme.
When approached, the British Business Bank told Small Business that they were unable to supply current uptake figures but expects the first lot will be ready “before the end of the year”.
A Treasury spokesman told the Telegraph: “We have provided over £79bn to 1.6m businesses through our government-backed Covid loans, including the Recovery Loan Scheme, to ensure firms had finance they needed throughout the pandemic.”
Recovery Loan Scheme 2021 full update – where do I apply for my loan?