Help for firms
Government loan scheme extended for two years
A small business loan scheme, launched during the pandemic, will be extended for a further two years under slightly revised terms, the UK government has confirmed.
The successor scheme to the Recovery Loan Scheme, which will open for applications next month, offers Government-backed guarantee to lenders.
Since launch in April 2021 to the end of June 2022 it has supported almost 19,000 businesses, including 1,035 in Scotland. It has loaned £4.5bn, of which £230m was in Scotland, with an average across the UK of £202,000.
The extension provides further government support for businesses grappling with cost pressures and adds to measures already announced, such as increasing the Employment Allowance, slashing fuel duty, and introducing a 50% business rates relief for eligible high street businesses.
The government gave a guarantee of 80% for loans made before 1 January, falling to 70% after that date. Lenders must ensure that the benefits of the government guarantee are passed through to businesses.
The maximum loan size remains at up to £2m. However, recognising that businesses and 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.
Business Secretary Kwasi Kwarteng said: “Small businesses are the lifeblood of the British economy, which is why we are determined to support our traders and entrepreneurs in dealing with worldwide inflationary pressures.”
Chris Wilford, CBI director of financial services policy, said: “With cashflow difficulties at the forefront of the minds of many business owners, continued access to Government-backed loans will bring great comfort.
“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 two-year extension to the Recovery Loan Scheme will be a lifeline for many businesses facing a rising tide of costs.
“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.”