Uncovering the new Recovery Loan – A commercial look at the scheme

Businesses Beware! Lenders are likely to be looking closely at serviceability and be tough on recovering unpaid loans

On the 31st of March 2021, the BBLS, CBILS and CLBILS schemes closed and on the 6th of April the new Recovery Loan Scheme (RLS) launched. The new scheme which is, again, overseen by the British Business Bank is designed to support access to finance for UK businesses as they recover and grow following the pandemic.

We are grateful to Jo Wilmott from The Minster Partnership Commercial Ltd in Dorset, for detailing in this article what Recovery Loans entail, and how they differ from BBLS, CBILS and CLBILS. As Insolvency Practitioners and Turnaround Specialists, we acknowledge the important part that the Recovery Loan Scheme will play in helping firms recover. However, as Jo points out, the lenders are likely to go in much harder to recover unpaid Recovery Loans, as quoted in the Mail on Sunday recently:

“HSBC, NatWest, Barclays and Lloyds have begun writing to businesses warning them that repayments on emergency support loans will soon be expected. Banks have handed out more than £75bn to 1.6m firms under several schemes set up by Rishi Sunak, the Chancellor, and are expected to spend millions on recovery. One senior banker warned that lenders could go in hard to recover debts after a recent court case found banks do not have a duty of care to borrowers who fail to repay.”

This means that firms considering applying for a Recovery Loan should explore all their options before deciding. It might well be that further loans are not the best answer.

The Recovery Loan Scheme – Key details

Most importantly, perhaps, the Recovery Loan Scheme will be driven much more by serviceability – the ability to repay the loan. This will have implications for the popularity of the scheme.

The key details are:

Initial observations from some members of the commercial finance broker community

Talk to Jo Wilmott or us about whether an RLS is right for your business

For many thousands of businesses that have managed to keep going because of Government support, the next few months are crucial. For help and advice on making the right decisions for your business going forwards if there is already financial pressure, talk to our insolvency practitioners on any of the numbers below. If you are interested in an RLS, then please contact Jo Wilmott: jo.wilmott@tmpllp.co.uk.

Antony Batty & Company offices: