We look at some of the most recent changes to the RLS and some of the myths surrounding the scheme. We hope that this information will help you make an informed decision if the Recovery Loan Scheme is the best option for your business.
The most recent changes to the Recovery Loan Scheme
The third iteration of RLS runs from August 2022. The key changes included
- A change in eligibility criteria means that most businesses will no longer have to confirm they have been affected by Covid-19.
- Businesses with turnover up to £45million are eligible for the scheme
- Personal guarantees allowed for facilities of all sizes, in line with a lender’s usual practices. Family home cannot be taken as collateral.
The change in eligibility criteria opens the door for the recovery loan scheme for more businesses, but many businesses are still unsure of how the Recovery Loan Scheme can work for them. Here are some of the common myths around the RLS.
Myth: RLS is only available for unsecured lending
Untrue. Secured loans are definitely available through RLS. Other facilities available elsewhere from other providers, including overdrafts, asset finance, and invoice finance.
Myth: I can apply directly for the RLS?
Untrue. A businesses cannot apply directly for RLS. RLS is available by approaching RLS accredited lenders in the same way as you would for a commercial facility.
Myth: RLS cannot be used for property investment
Untrue. As long as 50% of the turnover comes from trading activity (of which property investment can be eligible), the new RLS is available for trading businesses and property investment, and can be for both refinance and purchase purposes.
Myth: Interest-only repayment terms are not available for RLS
Untrue. There are interest-only loan options available through RLS, usually subject to the business meeting the lenders lending criteria.
How can I apply for the Recovery Loan Scheme
Our first recommendation before applying for the would be to speak to a licensed credit broker and understand more about the scheme and any other financial options that may be available to your business. Once you have done this you will need the following information
- Management accounts
- Business plan
- Historic accounts
- Details of assets
- Details of previous subsidy awards
About Johnston Financial Solutions Limited
Johnston Financial Solutions is an independent credit broker of commercial finance in Northern Ireland. Improving access to finance from a diverse range of alternative funders such as mainstream banks, challenger banks, pension funders, and peer-to-peer lenders. Book a call with Mark today to find out more.