Recovery Loan Scheme extended for two years

A scheme offering government-backed loans to small business has been extended for a further two years.

The Recovery Loan Scheme (RLS) launched in April 2021 and was designed to help businesses recovering from the coronavirus pandemic.

It offered loans of up to £2m with the government underwriting 70% of the debt, in return for a lender fee.

So far it has assisted almost 19,000 businesses with an average loan of £202,000, the government said.

However, hospitality operators told The Caterer they have struggled to access bank loans with many being told the sector is too “high risk” to lend to.

Accountancy firm Hazelwoods said the RLS had been “much less attractive” to banks than previous coronavirus loan schemes and discouraged lending to small and medium-sized business.

The RLS ended on 30 June but has now been extended until 2024. The maximum loan size remains £2m but the government said lenders may now require a personal guarantee from businesses looking to borrow money as operators were “generally now in a better position” than during the pandemic.

Business Secretary Kwasi Kwarteng said: “The extension of the Recovery Loan Scheme will help ensure we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK.”

The Confederation of British Industry (CBI) said it was working with government and lenders to ensure “businesses have access to the finance they need”.

Hospitality operators have warned that a difficulty accessing loans has restricted their growth plans as they look to recover from the impact of the pandemic.

Image: Dave Jacobs / Shutterstock