The coronavirus loan scheme, which was implemented to help a lot of businesses with much needed survival funds over the pandemic period, ended on March 31, 2021.
The government has made plans to divert attention towards economic rebuilding, business reforms and start-ups, and began a new loan scheme in April 2021.
The new post-pandemic Covid-19 loan scheme aims to focus on both small and large-scale businesses. It will provide useful finances to help affected businesses thrive, gain stability and expand despite all setbacks. There are different criteria required to get this fund, and the application process has been made simple and free.
How do the COVID-19 recovery loans work?
To encourage the financial institutions to give out money to those applying to be funded, the government has opted to give an 80% assurance for every loan applied for. However, the single responsibility of payback in case of a breach in compliance is on the borrower’s side.
The duration of the loans varies from three to six years. This depends on the kind of funding to be used. It could be:
- Overdrafts and Term Loans: This ranges from £25,001 to £10 million per business
- Asset finance and Invoice finance: Loan ranges from a £1,000 to £10 million per business
For any term loan or asset finance loan acquired, it will last for a period of six years, while overdrafts and invoice finance will run for up to three years.
Also, for loans below £250,000, a personal guarantee won’t be demanded by the lenders, and the use of a personal property as security in obtaining the loan is restricted.
How do I know if my business is eligible for this scheme?
Who can apply?
To be eligible to apply for a Coronavirus Recovery Loan, applicants must meet the following:
- The trading location must be in the UK
- Must be able to provide evidence of being seriously affected by the pandemic.
- They must have potential to be viable for future trading
- They are not in any type of insolvency procedure
All applicants that meet these criteria are eligible to apply for this loan, no matter the size of the business.
Getting any other form of government funding for the coronavirus pandemic support does not limit you in any way to apply for this recovery loan scheme. The recovery loan has an interest that is paid periodically alongside other associated fees.
The application period will span through till on the 31st of December 2021.
Who cannot apply
Businesses from any sector can apply, except:
- banks, building societies, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
How do you apply for the COVID-19 recovery loan?
Applicants are to apply directly to their preferred lenders. You can check out the list of lenders on the British Business Bank website. The selection and verifying processes to check frauds may vary for each lender.
It is advisable that you apply for this loan in a way you would for any other type of loan if there was no Covid-19 pandemic because the prospect and economic viability of each application will be scrutinised and considered.
You can find more information on the governments own Recovery Loan Scheme page.
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