31 January 2022

RLS still “a viable option” for many SMEs

At the start of the month the criteria for Recovery Loan Scheme (RLS) applications changed, with the finance now only open to small and medium sized businesses with a turnover of less than £45 million.

The changes, which came into effect on 1st January 2022, also include a new maximum loan amount available, dropping to £2 million, from the previous limit of £10 million.

Bathgate Business Finance successfully brokered £31million in CBILS loans for businesses across the North West in 2020/21. When this and the CLBILS schemes were replaced by the RLS last year, Bathgate focused its team’s expertise on helping businesses get the most out of the RLS scheme having written £4m to date, with another £2m in its pipeline.

The changes to the RLS criteria mean that it will be more difficult for larger businesses to access government-backed finance, despite the scheme having been extended until 30th June 2022. However, there are still opportunities for many SMEs that may be being missed.

The National Association of Commercial Finance Brokers’ (NACFB) annual member survey for 2021 highlighted low uptake of the RLS scheme even prior to the changes. Some reasons suggested were clients not meeting the criteria (16%) and standard loans better meeting client needs (15%), but almost half cited a lack of direct enquiries about the scheme (49%) and a further five percent highlighted a lack of information about the scheme as an issue*.

Bathgate Business Finance MD, Gordon Andrews, said: “Creating a scheme where standard term loans better suit some client needs may have been intentional in the design of the RLS, but it is still a viable option for many SMEs.

“The lack of direct enquiries and concerns around availability of scheme information are telling. It suggests to me that some businesses are simply not even considering the scheme as an option and may be missing out.

“The RLS offers so many benefits – up to £250k supported by government guarantee, meaning no personal guarantee or company debenture is needed. Selected funders offer interest-only loans for up to 12 months and it is also possible to secure up to 6 years funding. It’s still a viable option for many SMEs and we’d encourage business owners to explore the opportunity before discounting it.”

*Read full report here (p24 – 39)

For more information on the Recovery Loan Scheme (RLS), contact info@bathgatebf.co.uk or call 0151 625 7323.