Restart Grants and Recovery Loans: are you eligible?
Recovery Loan Scheme launches
The Recovery Loan Scheme will ensure businesses continue to benefit from Government-guaranteed finance throughout 2021. Loans will include 80% government guarantee and interest rate cap.
With non-essential retail and outdoor hospitality reopening today, Ministers have ensured that appropriate support is still available to businesses to protect jobs. From last week, businesses – ranging from coffee shops and restaurants to hairdressers and gyms – and can access loans varying in size from £25,000, up to a maximum of £10 million. Invoice and asset finance is also available from £1,000.
You can apply for a recovery loan if your business:
- is trading in the UK
You need to show that your business:
- would be viable were it not for the pandemic
- has been adversely impacted by the pandemic
- is not in collective insolvency proceedings (unless your business is in scope of the Northern Ireland Protocol in which case different eligibility rules may apply)
Businesses that received support under the earlier COVID-19 guaranteed loan schemes are still eligible to access finance under this scheme if they meet all other eligibility criteria.
Who cannot apply
Businesses from any sector can apply, except:
- banks, building societies, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
What you can get
- term loans or overdrafts of between £25,001 and £10 million per business
- invoice or asset finance of between £1,000 and £10 million per business
No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
How long the loan is for
The maximum length of the facility depends on the type of finance you apply for and will be:
- up to 3 years for overdrafts and invoice finance facilities
- up to 6 years for loans and asset finance facilities
How to apply
Find a lender accredited to offer Recovery Loans from the list on the British Business Bank website.
New Restart Grants
A new grant scheme launched last week: The Restart Grant scheme. The scheme supports businesses in the non-essential retail, hospitality, leisure, personal care and accommodation sectors with a one-off grant, to reopen safely as COVID-19 restrictions are lifted.
Eligible businesses in the non-essential retail sector may be entitled to a one-off cash grant of up to £6,000 from their local council.
Your business may be eligible for a Restart Grant if it is:
- based in England
- in the non-essential retail, hospitality, accommodation, leisure, personal care or gym sectors
- trading on 1 April 2021
Businesses excluded from the fund
You cannot get funding if your business:
- is in administration, insolvent or has been struck off the Companies House register
- has exceeded the permitted subsidy allowance
You must notify your local council if your situation changes and you no longer meet the eligibility criteria.
This scheme is covered by 3 subsidy allowances:
- Small Amounts of Financial Assistance Allowance – you’re allowed up to £335,000 (subject to exchange rates) over any period of 3 years
- COVID-19 Business Grant Allowance – you’re allowed up to £1,600,000
- COVID-19 Business Grant Special Allowance – if you have reached your limits under the Small Amounts of Financial Assistance Allowance and COVID-19 Business Grant Allowance, you may be able to access a further allowance of funding under these scheme rules of up to £9,000,000, provided certain conditions are met
Grants under these 3 allowances can be combined for a potential total allowance of up to £10,935,000 (subject to exchange rates).
What you get
Local councils will use their discretion to determine whether businesses meet the eligibility criteria for this grant scheme.
Eligible businesses will be paid:
- a one-off grant of up to £6,000 in the non-essential retail sector
- a one-off grant of up to £18,000 in the hospitality, accommodation, leisure, personal care and gym sectors
Cash flow and business planning in these uncertain times may appear difficult but there are some practical steps you can take to minimise potential disruption to your business:
- Review your Budgets and set realistic and achievable targets for the remainder of 2021.
- Get your employees involved in a discussion of likely trading conditions and get their input on reducing costs and maintaining revenues.
- Review and flow chart the main processes in your business (e.g. Sales processing, order fulfilment, shipping etc.) and challenge the need for each step.
- Put extra effort into making sure your relationships with your customers are solid.
- Review your list of products and services and eliminate those that are unprofitable or not core products/services.
- Review efficiency of business processes and consider alternatives such as outsourcing certain activities locally or overseas.
- Agree extended payment terms with all suppliers in advance.
- Pull everyone together and explain the business strategy and get their buy-in.
Please talk to us about cash flow planning for the next six months, we can help with a template so you can do this yourself or work together to produce estimates for a variety of scenarios.