March 24, 2021

New loan scheme provides lifeline for construction and engineering businesses

News Article

As part of a package of new measures to help kick-start the British economy, the Government has, this month, launched a new Recovery Loan Scheme.

Here, Associate Solicitor and Corporate Finance expert, Matthew Johnson, explains how the new scheme could help construction and engineering businesses grow and return to profitability.

What is the Recovery Loan Scheme?

Replacing the existing Covid-19 finance schemes, such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), the Recovery Loan Scheme will launch on 06 April 2021 and end on 31 December 2021.

The scheme, administered by the British Business Bank (BBB), will ensure businesses “of any size” can continue to access affordable finance to recover and grow following Covid-19 disruption.

How does it work?

The Government will guarantee 80 per cent of the loan or finance facility to encourage lenders to lend in confidence. After you receive the loan, it will work just like any other; you will be expected to make repayments and cover the costs of any interest or fees (although they are expected to be low).

How much can I get?

Term loans and overdrafts will be available between £25,001 and £10 million per business, while invoice finance and asset finance will be available between £1,000 and £10 million per business.

What can the cash be used for?

The loan can be used for any “legitimate business purpose”, including growth and investment.

Is my business eligible for support?

Businesses of any size or sector are eligible for finance, providing they trade in the UK and can demonstrate that their operation is:

  • Viable or would be viable were it not for the pandemic
  • Has been impacted by the coronavirus pandemic; and
  • Is not in collective insolvency proceedings.

For further information on the new Recovery Loan Scheme or for advice on other available business revenue streams to help kick start your construction or engineering business, please contact us.