Critical Support Program for Government-Supported Loans to Small Businesses Extended for Two More Years Program to Support Access to Finance for Small Businesses Extended for Two Years
Provides strong support for businesses facing increased corporate financial pressures
Nearly 19,000 businesses have been supported since the program was launched in April 2021
Commerce Minister Kwasi Kwarteng today (Wednesday, July 20) announced that a major support program that provides government-backed loans to small businesses will be extended for another two years.
Originally launched in April 2021 to help businesses recover from the Covid-19 pandemic, the Recovery Loan Scheme has supported nearly 19,000 businesses, providing an average of £202,000 in support.
The Recovery Loan Scheme (RLS) is a government program designed to support UK businesses in accessing finance. It provides lenders with a guarantee of government support against the outstanding balance of the facility.
The extension provides further government support for businesses dealing with cost pressures and adds to measures already announced by the Chancellor of the Exchequer, such as an increase in the Employment Allowance, a cut in fuel duty and the introduction of a 50 percent business rate relief for qualifying high street businesses.
Business Minister Kwasi Kwarteng said.
“Small businesses are the lifeblood of the UK economy, which is why we are determined to support our traders and entrepreneurs in tackling global inflationary pressures.
“The extension of the Recovery Loan Scheme will help ensure that we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK.”
Chancellor of the Exchequer Nadhim Zahawi said.
“Small businesses are the engine of economic growth, supporting jobs and livelihoods in communities across the UK.
“The Recovery Loan Scheme has supported thousands of businesses over the past year and this extension will ensure they continue to receive the funding they need in the months ahead.”
The scheme has supported more than 16,000 UK businesses, as well as 1,000 in Scotland, 600 in Wales and 300 in Northern Ireland.
Businesses that have benefited from the scheme include Leeds-based Wildfire Marketing, which used the loan to recruit new staff to help grow the business, and White Light Ltd, a West End gig for a lighting company that needed funding to buy up-to-date equipment.
The principle behind the extended recovery loan program remains the same: the government will assume 70 percent of the lender’s debt at the individual borrower level in exchange for lender fees. Lenders must ensure that the benefits of the government guarantee are passed on to the business.
The maximum loan size remains at £2 million. However, recognising that businesses and the UK are now in a more prevalent position than during the pandemic, lenders may now require personal guarantees from borrowers in order to comply with standard business practice.
Chris Wilford, Head of Financial Services Policy at the CBI, said.
“This continues to be a tough time for businesses amid challenging economic headwinds and ongoing cost pressures.
“With cash flow difficulties a top concern for many business owners, continued access to government-backed loans will provide great comfort.
“The next phase of the Recovery Loan Scheme will provide a vital lifeline for businesses. the CBI will also continue to work with government and lenders to ensure businesses have access to the finance they need to grow.”
Shevaun Haviland, director general of the British Chamber of Commerce, said.
“After two years of pandemic damage and a faltering global economy, the BCC has been calling for continued financial support for businesses. The two-year extension of the Recovery Loan Program will be a lifeline for many businesses facing rising cost trends.
“It is now critical that businesses that need this additional support have access to the program as soon as possible to ensure they receive help before it is too late.”
