pebbles on the beach

Maximising your chances of success when applying for funding

Recovery Loan Scheme introduced

Dave Riley, Partner, Corporate Finance
25/11/2021
pebbles on the beach

Launched on 6 April 2021, the Recovery Loan Scheme (RLS) provides financial support to businesses across the UK as they recover and grow following the coronavirus pandemic.

We have substantial experience in dealing with the majority of the lenders on the scheme.

Facilities of up to £10 million are available per business and, a list of accredited lenders is available to view via the British Business Bank website. There are fewer lenders on the Recovery Loan Scheme than the previous CBILS.

There are similarities to the facilities previously provided under CBILS, namely:

  • no personal guarantees will be taken on facilities up to £250,000 and no private residence will be taken as security
  • the facilities are 80% backed by the government
  • the borrower has to meet the same criteria in that they are UK based, not in collective insolvency proceedings and, would be viable were it not for the impact of COVID-19.

The points of difference are:

  • unlike CBILS and Bounce Back loans, there is no support to cover the interest in the first 12 months
  • the terms are a maximum of three years for overdrafts and invoice finance, and six years for term loans and asset finance (rather than up to 10 years).
Changes from 1 January 2022
  • Your turnover must be below £45 million.
  • The maximum amount of finance available will be £2 million per business (maximum amount per Group limited to £6 million).
  • The guarantee coverage that the government will provide to lenders will be reduced to 70% (currently 80%).
While the annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%, we have seen rates as low at 6%.

We can help you

There are fewer lenders on the Recovery Loan Scheme, so getting yours right first time is key to making the process as efficient as possible and maximising your chances of success. The Crowe specialist team can support you with this. We can help you compile a professional, robust application pack with all the information required, incorporating a degree of external scrutiny. This will stand you in good stead when approaching and seeking support from existing and new lenders.

We will guide you through the process by:

  • assessing your funding needs and the most appropriate borrowing proposal
  • helping to identify any potential barriers
  • creating a structured lending proposal demonstrating:
    • how the business performed financially prior to the crisis
    • an assessment of how much you need to borrow with an assumption on headroom required
    • an assumption of how trading will be impacted over the next three to six months
    • how the business is likely to perform in the next two to three years
    • three year forecasts to support your business case with upside and downside sensitivities.

If the Recovery Loan Scheme is not the solution on its own

You and your lender may have already had a conversation about applying for a loan/facilities under the scheme, along with considering a rescheduling of existing facilities.

Irrespective of whether you qualify under the Recovery Loan Scheme, we can help you to assess your current facilities and financial performance and discuss:

  • improvements in your working capital
  • preparing a robust turnaround plan for the next three years
  • consider hire purchase and finance lease capital repayment holidays, particularly if they are with the same provider
  • agree an extension to your overdraft limit as long as there is a cashflow to support the correction of the facility
  • relaxing financial covenants, for example around EBITDA levels and interest cover
  • amending lending formula, for example extending invoice discounting advance rates, extending loan terms.

Your next steps

    If you need assistance in accessing the scheme or wish to have a conversation before you apply, please get in touch with your usual Crowe contact or Dave Riley, Andy Kay or Julie Mole.

Insights

How many companies, when facing financial uncertainty turn down the opportunity for financial support?
Deadlines to make amends to COVID-19 support claims are fast approaching, don’t get caught out.
Several government initiatives can help provide support to those with financial difficulties arising from the coronavirus disruptions.
It is time to think about business continuity preparedness as COVID-19 crisis has now reached a new critical phase.
How many companies, when facing financial uncertainty turn down the opportunity for financial support?
Deadlines to make amends to COVID-19 support claims are fast approaching, don’t get caught out.
Several government initiatives can help provide support to those with financial difficulties arising from the coronavirus disruptions.
It is time to think about business continuity preparedness as COVID-19 crisis has now reached a new critical phase.

Contact us

dave riley
Dave Riley
Partner, Corporate Finance
Manchester