Rishi Sunak launches Recovery Loan Scheme to save jobs in UK

Rishi Sunak launches Recovery Loan Scheme to save jobs in UK
Courtesy: WPA Pool / Pool | Getty Images News via Getty Images

A new Recovery Loan Scheme will ensure businesses in the UK continue to benefit from government-guaranteed finance throughout 2021.

With non-essential retail and outdoor hospitality reopening next week, Chancellor of the Exchequer Rishi Sunak said he wanted to ensure that appropriate support is still available to businesses to protect jobs. From this 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 available from £1,000.

This is in addition to the furlough scheme being extended until September 30, and the New Restart Grants scheme launched last week, providing funding of up to £18,000 to eligible businesses.

Business needs

Sunak said: “We have stopped at nothing to protect jobs and livelihoods throughout the pandemic and as the situation has evolved we have ensured that our support continues to meet businesses needs.

“As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis.”

The new scheme, which was announced at the Budget and is to run until the end of December, will be administered by the British Business Bank, with loans available through a diverse network of accredited commercial lenders. Around 26 lenders have already been accredited for day one of the scheme, with more to come shortly, and the government will provide an 80 per cent guarantee for all loans. Interest rates have been capped at 14.99 per cent and are expected to be much lower than that in the vast majority of cases, and Ministers are urging lenders to ensure they keep rates down to help protect jobs.

The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes – such as the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme – put into place last year.

Plan for Jobs

The UK Treasury Department said that the new scheme is being supplemented with the Plan for Jobs, focused on protecting, supporting and creating jobs across the country through the Kickstart scheme, T-level and a National Careers Service.

Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), welcome the latest intervention: “These loans can be taken alongside existing Covid loans to help firms refinance, restructure and go for growth.

“It’s vital support remains as restrictions relax and demand returns to normal, allowing businesses to recover, save jobs, and support for reopening.”

So far, the government’s emergency loan schemes have supported more than £75 billion of finance for 1.6 million British businesses and this new scheme will build on that success.

This is part of the government’s unprecedented £350 billion support package which has included paying millions of workers’ wages through the furlough scheme and generous grants and tax deferrals.

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