The UK government are set to launch a replacement Recovery Loan Scheme, offering business loans of up to £2m.
The new scheme, expected to be announced soon, will be another form of Covid-19 financial support.
The new recovery loans will be backed by a 70% government guarantee in the event of default according to the Financial Times.
In comparison, the Bounce Back Loan scheme had a 100% government guarantee, and the Coronavirus Business Interruption Loan Scheme (CBILS) an 80% guarantee.
Unlike the previous coronavirus financial support measures, borrowers will have to offer a personal guarantee for the new recovery loans. This means that borrowers will be liable for payment defaults. The aim of this is to deter criminals from accessing the loans with no intentions of making repayments.
The Bounce Back Loan scheme faced criticism for providing loans to businesses with little checks, and £4.9bn is now estimated to be unrecoverable due to Covid loan fraud.
The current Recovery Loan Scheme (ending 30 June 2022) guarantees 80% of a bank loan up to £10m.
Article by Small Business
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