HomeInsightsCall for extension to the Recovery Loan Scheme

Call for extension to the Recovery Loan Scheme

A leading accountancy firm is calling on the government and the British Business Bank (BBB) to extend the government’s Recovery Loan Scheme to the end of 2022.

It also wants the Treasury to insist that lenders accept coronavirus business interruption loans transferred under this scheme.

Due to end on 30 June 2022, the Recovery Loan Scheme is currently open to businesses of any size to help them access finance so they can recover after the pandemic and negotiate the transition period.

Current end date may cause ‘severe financing problems’

But tax and advisory firm Azets is warning that many businesses could face ‘severe financing problems’ in the latter half of 2022 if the scheme is not extended beyond the summer. It says the current system is making it ‘extremely difficult’ for businesses to access its outstanding funding under the schemes.

Azets went on to explain that banks currently require any outstanding coronavirus business loans to be repaid before they will consider refinancing applications through the Recovery Loan Scheme.

Changing landscape means financing needs to be flexible

Banking partner at the firm, Murdoch MacLennan, said: “A business’ funding requirements can change quickly, and a lender’s appetite for risk and funding strategies also change, so the market for refinancing needs to be as accessible as possible.

“CBILS and the Recovery Loan Scheme helped protect countless businesses and jobs, but there is a risk that these rigid rules could start creating extensive problems for those same businesses saved by the schemes.

“Fortunately, a handful of lenders are now considering using the Recovery Loan Scheme to replace a coronavirus business interruption loan facility, but that is only of any value if the RLS scheme is extended for a significant period, ideally to the end of 2022.”

Azets states that any businesses concerned about the coronavirus support they have received should seek advice as soon as they can.

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