Digital relationship bank Allica Bank, focused on established British businesses, has highlighted the potential misperception of the Government’s Recovery Loan Scheme (RLS) as a stumbling block for businesses seeking crucial funding for growth.
In a recent survey conducted by the bank among asset finance brokers, it was found that even though nearly 90% are aware that the RLS is still accessible for banks, less than half (49%) have recommended RLS-backed loans to their clients in the past six months.
One of the key reasons appears to be a fundamental misunderstanding of the types of businesses eligible for the scheme.
Interestingly, approximately 49% of brokers have refrained from suggesting an RLS-backed loan to clients under the impression that it could be used only for business recovery.
Originally, the scheme, launched by the British Business Bank during the COVID-19 pandemic, was indeed aimed at supporting businesses in recovery.
However, the latest version of the RLS has omitted any requirement for a business to be in recovery to be eligible. The British Business Bank now promotes the scheme as a tool to aid businesses seeking to invest and grow.
David Holdstock, government lending manager at Allica Bank, said: “The RLS allows Allica to support businesses with loans that would otherwise fall outside of our usual credit appetite. It’s a remarkable chance for brokers to help their clients secure funding they may not have otherwise obtained.”
Holdstock further noted: “Due to the scheme’s name, it’s understandable that many believe it can only be used to aid businesses in recovery, but that is no longer the case.
“We aim to raise awareness among our broker community about its various uses. It’s an excellent initiative from the British Business Bank that hasn’t seen as much uptake as we’d anticipated, which is unfortunate given the current economic climate.”
To qualify for the RLS, a business must be based in the UK and have a group turnover of up to £45m.
The latest version of the scheme will continue until 30th June 2024. More information about the Recovery Loan Scheme can be found at www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/.
