I am tabling this statement for the benefit of hon. and right hon. Members to bring to their attention the details of the recovery loan scheme (RLS) announced by the Chancellor of the Exchequer on 3 March 2021.
RLS will be facilitated by the Government-owned British Business Bank and delivered through its delivery partners. Lenders will offer facilities of up to £10 million to support businesses that are affected by the coronavirus outbreak. There will be no limit on the number and aggregate value of loans that can be made under the scheme.
The scheme is based on the British Business Bank’s existing coronavirus business interruption loan scheme (CBILS) but is open to all businesses regardless of turnover.
The key parameters of the scheme are as follows:
The percentage of the remaining balance of each loan that is guaranteed by the Government is 80%.
The maximum facility size will be £10 million per business, and the minimum facility size will be £25,001 for loans and overdrafts and £1,000 for asset and invoice finance.
Businesses will be required to meet the costs of interest payments and any fees from the outset.
Businesses who have made use of the current coronavirus loan schemes will be able to access the new scheme.
The lender must establish that the borrower has a viable business proposition assessed according to its normal commercial lending criteria. This may, but is not required to, be determined without regard to any concerns over the borrower’s short-to-medium term business performance due to the uncertainty and impact of coronavirus.
The scheme launches on 6 April and is open until 31 December, subject to review. The Government will be subject to an equivalent contingent liability as for CBILS. The maximum contingent liability for assumed initial lending of £12 billion (our central estimate) is £9.6 billion.
I will be laying a departmental minute today containing a description of the liability undertaken.