Recovery Loan Scheme to be extended
Originally launched in April 2021, the scheme, which was tasked with helping firms of any size access loans to aid recovery from the pandemic, gives lenders a government-backed guarantee against the outstanding balance of the facility.
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.”
Financial assistance
According to the Government, the scheme has already supported almost 19,000 businesses with an average of £202,000 in financial assistance.
While the Government backs 80% of the finance for the RLS, the lender and borrowers are liable for the debt.
This comes as bank lending to small and medium hospitality firms fell by more than £1.4bn to £14.61bn in April 2022, according to chartered accountants and business advisers Hazlewoods.
Furthermore, the company criticised the RLS, stating banks were less keen to lend through it.
Less attractive
Hazlewoods associate partner Rebecca Copping said: “Banks are really starting to back away from lending to hospitality businesses.
“Without financial support from lenders, some pubs, restaurants and hotels are really going to struggle.
“With a cost-of-living crisis weakening consumer spending, securing bank lending at viable rates is no easy task for hospitality businesses at the moment.
“The Recovery Loans Scheme that has replaced Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Schemes (BBLS) is much less attractive for banks, that has impacted the level of risk they are willing to take.”
