Launched by Rishi Sunak in April, the Recovery Loan Scheme (RLS) was intended to be the next stage of the return to financial normality, post-pandemic.
But while it appeared to be a step in the right direction – one question remains – why hasn’t it had the uptake that the industry expected?
Under the scheme, up to £10m is available to a single business, with £30m available across a group and an 80 per cent government guarantee.
After previously shelling out £74bn in emergency funds to assist SMEs through the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), the government intended the Recovery Loan Scheme to test the waters with credit conditions and terms as a middle ground for pre- and post-pandemic finance.
But, with such a high volume of finance being taken on throughout the pandemic, understandably, the demand has muted considerably, with the majority of early CBILS holders beginning to repay their loans only just now.
Is timing the only issue? Well, no.
Many in need of the scheme have had difficulties being accepted for the facility. There are currently 59* providers able to offer RLS, but it has been a long road to this point.
With funders attempting to return as close as possible to their pre-pandemic conditions, numerous applications are being rejected, with affordability checks especially being an issue along with turnover value, despite all business sizes supposedly considered for the scheme.
So what facility is right for me if RLS isn’t the right fit?
For a business with assets of a strong resell value, refinancing could be the product for you.
With quick and easy access to the funds released from the value of the assets, you will still retain full use of the assets and can spread out the costs of existing finance agreements, further reducing your working capital.
Alternatively, there’s invoice finance. This could work as another utilisable facility for your business where, instead of taking on another loan or not being able to achieve the rates that work for your business through RLS, you can free up your cashflow by releasing capital locked up in outstanding invoices.
With a 24-hour turnaround on released funds and a flexible facility to evolve with your business, this is a great facility for you to use as and when you need it.
The Recovery Loan Scheme has been a great support for many businesses, though some businesses haven’t found it to be as black and white as initially expected.
By any means, the scheme is, at the very least, a sign of our foray back to pre-pandemic conditions and hopefully the traction will bring more clarity to businesses and funders about what’s to be done to make the transition to normality that much smoother.
*correct as of 13/09/2021