Recovery Loan Scheme (RLS) update

Recovery Loan Scheme (RLS) – further details have now been published and I have summarised the main points below. I have also looked at some of the most popular banks to see how easy it is to apply and find any further information I can.
If you need help with your application then please let us know  – see section below on information likely to be requested.
I am interested to know if anyone has applied for this yet, with which bank and if/when an offer is made as the banks were really variable in their service times previously so it would be good to know which banks are the best.

Key features:

  • Borrow between £25,001 and £10million for term loans/overdrafts
  • Borrow from £1k for asset and invoice finance.
  • Repayment periods 3 months – 6 years
  • No interest free period, payments start straight away.
  • Runs until 31 December 2021, subject to review
  • Personal guarantees not permitted on £250k or less
  • It is up to the lender to decide whether to lend you the money – at their discretion.

Eligibility criteria:

  • Be able to self-certify that business impacted by Coronavirus
  • Be UK based and generate more than 50% of turnover from trading activity
  • Be a viable business – the lender may disregard (at its discretion) any concerns over short-medium business performance due to Covid 19 impact.

Credit and Fraud Checks:

  • Will be carried out.

So,  how much can you borrow?

The most you can borrow is the lowest of the following:

  • £10m
  • Double the wages bill for 2019, or last year available
  • 25% of 2019 turnover
  • Applicants’ liquidity needs for the next 18 months (SMEs) or 12 months (large businesses) – i.e   how much cash you need for the business to run over the next 18 months
  • If a business has already borrowed under CBILS or BBL this will count towards maximum amount.

What information are lenders likely to ask for?

  • The British Bank is stating that information likely to be required will include:
    • Management accounts
    • Business plan
    • Historic accounts
    • Details of assets.

So which banks are ready to lend?

HSBC: ( https://www.business.hsbc.uk/en-gb/finance-and-borrowing/credit-and-lending/recovery-loan-scheme)
No personal guarantees up to £300k which is £50k more than the published amount.
Open to new and existing customers.
Fixed interest rates for all loans up to £299,999 – 4.49% for loans up to 3 years or 4.99% for loans over 3 years.
You can apply online and it looks pretty easy.

Santander:  https://www.santandercb.co.uk/recovery-loan-scheme
You have to wait until your relationship director (whoever that is?) contacts you if they think you may be eligible.

Lloyds: https://www.lloydsbank.com/business/business-loans/recovery-loan-scheme.html?WT.ac=lloyds-bb_and_sme-business_loans-larger_loans-FOM-RLS
Existing customers only.   Fill out a form online to enquire.

Barclays: https://www.barclays.co.uk/business-banking/borrow/recovery-loan-scheme/
To apply you can request a call back and they will contact you.  Barclays were particularly slow with the bounce back loans so let’s hope they do better this time.

Natwest : https://www.business.natwest.com/business/support-centre/service-status/coronavirus/recovery-loan-scheme.html

There is a useful repayment calculator on their recovery loans page but the interest rates they are quoting are high and much higher than HSBC – they do say that rates are for illustrative purposes so it would be interesting to find out what people are actually being quoted.  You can apply online but only existing customers are eligible.

Asset Finance: Only Paragon and Aldermore are currently approved lenders
https://www.aldermore.co.uk/business/business-finance/asset-finance/asset-finance-recovery-loan-scheme-rls/
https://www.paragonbank.co.uk/recovery-loan-scheme

Banks / funders not yet in the scheme:
Funding Circle – awaiting approval
Starling – in discussions, not yet live.
Tide- not yet.
Co-op bank – not yet

Get in touch – as always if you need any help or advice we are here to help. Please call either myself, Michelle or Debbie if you would like any more information.

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