Maximising your chances of success when applying for funding

The new iteration of the Recovery Loan Scheme (RLS) is designed to support access to finance for UK businesses as they look to invest and grow. 

We have substantial experience in dealing with the majority of the lenders on the scheme.

Facilities of up to £2 million are available per business and, a list of accredited lenders is available to view via the British Business Bank website.

The finance can be used for any legitimate business purpose. You can borrow under the scheme even if you have already borrowed under other schemes (CBILS, CLBILS, BBLS). In certain circumstances though, the amount a business can borrow may be restricted.

There are similarities to the facilities previously provided under CBILS, namely:

• the borrower has to meet the same criteria in that they are UK based, not in collective insolvency proceedings and, would be viable were it not for the impact of COVID-19. 

The points of difference are:

• unlike CBILS and Bounce Back loans, there is no support to cover the interest in the first 12 months
• the terms are a maximum of three years for overdrafts and invoice finance, and six years for term loans and asset finance (rather than up to 10 years)
• your turnover must be below £45 million
• the facilities are 70% backed by the government although, the business remains 100% liable for the debt
• the maximum amount of finance available is £2 million per business.
• Personal guarantees can be taken at the lender’s discretion, in line with their normal commercial lending practices. Principal Private Residences cannot be taken as security within the scheme.
• The annual effective rate of interest cannot be more that 14.99%.

We can help you

There are fewer lenders on the Recovery Loan Scheme, so getting yours right first time is key to making the process as efficient as possible and maximising your chances of success. The Crowe specialist team can support you with this. We can help you compile a professional, robust application pack with all the information required, incorporating a degree of external scrutiny. This will stand you in good stead when approaching and seeking support from existing and new lenders.

We will guide you through the process by:

• assessing your funding needs and the most appropriate borrowing proposal
• helping to identify any potential barriers
• creating a structured lending proposal demonstrating:
  • how the business performed financially prior to the crisis
  • an assessment of how much you need to borrow with an assumption on headroom required
  • an assumption of how trading will be impacted over the next three to six months
  • how the business is likely to perform in the next two to three years
  • three year forecasts to support your business case with upside and downside sensitivities.

If the Recovery Loan Scheme is not the solution on its own

You and your lender may have already had a conversation about applying for a loan/facilities under the scheme, along with considering a rescheduling of existing facilities.

Irrespective of whether you qualify under the Recovery Loan Scheme, we can help you to assess your current facilities and financial performance and discuss:

• improvements in your working capital
• preparing a robust turnaround plan for the next three years
• consider hire purchase and finance lease capital repayment holidays, particularly if they are with the same provider
• agree an extension to your overdraft limit as long as there is a cashflow to support the correction of the facility
• relaxing financial covenants, for example around EBITDA levels and interest cover
• amending lending formula, for example extending invoice discounting advance rates, extending loan terms.

Your next steps

If you need assistance in accessing the scheme or wish to have a conversation before you apply, please get in touch with your usual Crowe contact or Andy Kay or Julie Mole.