Loans will include 80% government guarantee and interest rate cap
With non-essential retail and outdoor hospitality reopening next week, ministers have ensured that support is still available to businesses to protect jobs.
From today (6 April 2021), businesses, ranging from coffee shops and restaurants, to hairdressers and gyms, can access loans varying in size from £25,000, up to £10 million. Invoice and asset finance is available from £1,000.
The Chancellor of the Exchequer, Rishi Sunak, said:
“We have stopped at nothing to protect jobs and livelihoods throughout the pandemic and as the situation has evolved we have ensured that our support continues to meet businesses needs.
“As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis.”
This is in addition to furlough being extended until 30 September, and the New Restart Grants scheme launched last week. The New Restart Grant provides funding of up to £18,000 to eligible businesses.
The Government is also supplementing this with the Plan for Jobs, focused on protecting, supporting and creating jobs across the country through the Kickstart scheme, T-level and a National Careers Service.
The scheme, which was announced at budget and runs until 31 December 2021, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders.
26 lenders have already been accredited for day one of the scheme, with more to come shortly. The government will provide an 80% guarantee for all loans. Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases. Ministers have urged lenders to ensure they keep rates down to help protect jobs.
The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes, such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme.
Rain Newton-Smith, CBI chief economist, said:
“The coronavirus loan schemes have provided a critical lifeline to businesses, and so its successor – the new Recovery Loan scheme – comes as a huge relief to firms.
“These loans can be taken alongside existing COVID loans to help firms refinance, restructure and go for growth.
“It’s vital support remains as restrictions relax and demand returns to normal, allowing businesses to recover, save jobs, and support for reopening.”