Business Secretary Kwasi Kwarteng announced the Recovery Loan Scheme, originally launched in April 2021 to help businesses recovering from the COVID-19 pandemic, will be extended to ensure thousands of small businesses across the UK can continue to operate.
Already the scheme has supported almost 19,000 businesses with an average of £202,000 in support.
The extension provides further government support for businesses grappling with cost pressures and adds to measures already announced by the Chancellor, such as increasing the employment allowance, slashing fuel duty, and introducing a 50 per cent business rates relief for eligible high street businesses.
The scheme has supported over 16,000 English businesses, as well as 1,000 businesses in Scotland, 600 Welsh businesses and 300 in Northern Ireland.
The principle behind the extended Recovery Loan Scheme remains unchanged: government will underwrite 70 per cent of lender liabilities at the individual borrower level, in return for a lender fee. Lenders must ensure that the benefits of the government guarantee are passed through to businesses.
The maximum loan size remains at up to £2 million. However, recognising that businesses in the UK, more generally, are now in a better position than they were during the pandemic, lenders may now require a personal guarantee from the borrower, in line with standard commercial practice.
Chris Wilford, CBI director of financial services policy, said this next phase of the Recovery Loan Scheme will provide a critical lifeline for firms. The CBI will also continue to work with government and lenders on ensuring businesses have access to the finance they need to go for growth.
Shevaun Haviland, director general of the British Chambers of Commerce, said the BCC has been calling for this continued financial support for firms.
“The two-year extension to the Recovery Loan Scheme will be a lifeline for many businesses facing a rising tide of costs,” he said.
“It is now essential that businesses in need of this extra support can access the scheme as quickly as possible to make sure they get help before it’s too late.”
