What is the Recovery Loan Scheme?
The Recovery Loan Scheme 2023 is a UK government-backed initiative designed to help businesses affected by the COVID-19 pandemic to access finance as they recover and grow.
The scheme was launched on 6 April 2021 and is scheduled to run until 31 June 2024, subject to review.
Under the scheme, businesses can apply for loans ranging from £25,001 up to a maximum of £10 million. The loans are available through a network of accredited lenders, including banks, asset finance providers, and invoice finance providers.
The loans can be used for a wide range of business purposes, such as managing cash flow, investment in new equipment or premises, or supporting growth and expansion plans.
However, the scheme is specifically designed to support businesses that can demonstrate that they have been adversely affected by the COVID-19 pandemic.
The government provides a guarantee to lenders of 80% of the loan amount, meaning that businesses will be required to repay the full amount of the loan plus interest and any applicable fees.
The interest rates and terms of the loans will vary depending on the lender, the amount borrowed, and the risk profile of the business.
Recovery Loan Scheme 2023 Interest Rates?
The interest rates for a Recovery Loan under the UK government’s scheme will vary depending on the lender, the amount borrowed, and the risk profile of the borrower.
The government has not set specific interest rates for the scheme, as this is determined by individual lenders.
However, it’s worth noting that the interest rates for Recovery Loans are likely to be higher than those for other forms of business borrowing, as the scheme is designed to support businesses that may have been adversely affected by the COVID-19 pandemic and may be considered higher risk.
The interest rates may also vary depending on the repayment term. With longer-term loans typically carrying higher interest rates than shorter-term loans.
Businesses are advised to shop around and compare offers from different lenders. This is to find the most competitive interest rates and loan terms that meet their needs.
It’s also important to ensure that the business can afford to repay the loan. You will need to take into account the interest rates, fees, and any other associated costs.
What is the Recovery Loan Scheme acceptance rate for 2023?
There is no publicly available data on the acceptance rate of the Recovery Loan Scheme. This will vary depending on a range of factors such as the lender, the industry sector, the size of the loan, and the risk profile of the borrower.
However, it’s worth noting that businesses applying for a Recovery Loan will need to meet the eligibility criteria set out by the government and the individual lenders.
This may include demonstrating that they have been adversely affected by the COVID-19 pandemic. Also providing evidence of their financial performance and projections, and meeting the lender’s credit assessment and affordability criteria.
It’s also important to note that the Recovery Loan Scheme is not a guaranteed source of funding, and businesses should explore all their options. We would recommending seeking professional advice before applying for a loan.
Additionally, businesses should be mindful of their ability to repay the loan, taking into account the interest rates, fees, and any other associated costs
Is a Recovery Loan the same as a Bounce Back Loan?
No, a Recovery Loan is not the same as a Bounce Back Loan. While both loan schemes were introduced by the UK government to support businesses affected by the COVID-19 pandemic, they have some key differences in terms of the amount of finance available, the eligibility criteria, and the terms and conditions of the loans.
The BBL Scheme was launched in May 2020. This was to provide smaller businesses with easy access to finance of up to £50k.
The loans were 100% government-backed and had no fees or interest to pay for the first 12 months, with a fixed interest rate of 2.5% thereafter.
The loans were available to businesses that had been trading before 1 March 2020, and that were not already receiving other government-backed COVID-19 support.
In contrast, the Recovery Loan Scheme, launched in April 2021, provides larger loans of between £25,001 and £10 million. It is available to a wider range of businesses, including those that have received previous COVID-19 support.
The loans are not 100% government-backed and are subject to affordability and credit checks. These are carried out by the accredited lenders participating in the scheme.
Overall, while both loan schemes aim to support businesses impacted by the pandemic, the Recovery Loan Scheme is a broader and more flexible scheme.
The scheme is designed to provide larger loans to businesses looking to recover and grow, while the Bounce Back Loan Scheme was a targeted initiative aimed at providing quick and easy access to smaller loans.
How long will the Recovery Loan scheme last?
The UK government’s Recovery Loan Scheme was launched on 6 April 2021. It was originally scheduled to run until 31 December 2021.
This has been reviewed and has been extended again until June 2024. This means that businesses have until the end of the year to apply for loans under the scheme.
The government has indicated that it will keep the scheme under review and will work closely with lenders. This is to ensure that businesses continue to have access to the support they need.
Businesses considering applying for a Recovery Loan should keep up to date with any updates or changes to the scheme.
Are Recovery Loans hard to get?
The eligibility criteria for the Recovery Loan Scheme will depend on the individual lender. Generally, these loans are not necessarily harder to get than other forms of business borrowing.
However, businesses will need to meet certain requirements to be considered for a loan under the scheme.
To be eligible for a Recovery Loan, businesses must demonstrate that they have been adversely affected by the COVID-19 pandemic. They also need to require financing to support their recovery and growth.
They will also need to meet the lender’s credit and affordability checks. Lenders will require financial statements, cash flow projections, and other supporting documentation.
The Recovery Loan Scheme is not a guaranteed source of funding. Businesses should be aware that the application process may take longer than for other forms of financing. Especially if additional information or documentation is required.
Additionally, interest rates and fees for Recovery Loans may be higher than for other forms of borrowing. This is particularly useful if the business is considered higher risk.
Overall, businesses considering applying for a Recovery Loan should carefully assess their eligibility and affordability.
As a FCA Regulated broker we can help compare offers from different lenders. We can offer professional advice to ensure that you are making informed decisions about your financing options.
How to apply for a Recovery Loan?
To conclude applying for a Recovery Loan is very simple. Enter your details below or call 0161 8211478 to speak with one of our specialists.