Covid Recovery Loan Scheme extended for further two years

A support scheme to help small businesses access finance to aid their recovery following the Covid pandemic has been extended for a further two years, Business Secretary Kwasi Kwarteng has announced.

The Recovery Loan Scheme originally launched in April 2021 to help businesses recovering from the Covid-19 pandemic. So far, the scheme has supported almost 19,000 businesses with an average of £202,000 in support by giving lenders a government-backed guarantee against the outstanding balance of the facility.

In the North-west, 1,968 businesses have together secured over £455 million to support their recovery from the pandemic.

The two year extension announced by the Business Secretary will see the government underwrite 70% of lender liabilities for loans of up to £2 million; however, in line with the improved economic circumstances since the scheme was first introduced, lenders may now also require a personal guarantee from the borrower.

Business Secretary, Kwasi Kwarteng, said: 

“Small businesses are the lifeblood of the British economy, which is why we are determined to support our traders and entrepreneurs in dealing with worldwide inflationary pressures. 

“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.”

Chancellor of the Exchequer, Nadhim Zahawi, said:

“Small businesses are the engines of economic growth, supporting jobs and livelihoods in communities right across the UK.

“The Recovery Loan Scheme has supported thousands of businesses over the past year and this extension will ensure they continue to access the finance they need to navigate the months ahead.”

Business groups have welcomed the extension to the Covid Recovery Loan Scheme, particularly in light of rising inflation, which currently stands at 9.4%.

Chris Wilford, CBI Director of Financial Services Policy, said: 

“Amidst challenging economic headwinds and continued cost pressures, this remains a difficult time for business. 

“With cashflow difficulties at the forefront of the minds of many business owners, continued access to Government-backed loans will bring great comfort. 

“This next phase of the Recovery Loan Scheme will provide a critical lifeline for firms. The CBI will also continue to work with Government and lenders on ensuring businesses have access to the finance they need to go for growth.” 

Shevaun Haviland, Director General of the British Chambers of Commerce, said:

“After two years of pandemic disruption and with a faltering global economy, the BCC has been calling for this continued financial support for firms.  The two-year extension to the Recovery Loan Scheme will be a lifeline for many businesses facing a rising tide of costs. “It is now essential that businesses in need of this extra support can access the scheme as quickly as possible to make sure they get help before it’s too late.”