Rishi Sunak to extend UK payback loan program until June 2022

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The six-month extension comes as the program crosses the £ 1billion lending milestone.

Image source: Rishi Sunak / The Treasury / Flickr.

Chancellor Rishi Sunak is expected to postpone the closure of the UK’s emergency loan guarantee for small businesses until the second half of 2022.

Initially, the Recovery Loan Scheme (RLS) was put in place to shut down new applicants on December 31; however, on Wednesday Sunak will extend this date until June 30, 2022.

Administered by the British Business Bank, the RLS includes a government backed guarantee on business loans ranging from £ 25,000 to a maximum of £ 10million, with interest rates capped at 14.99%.

Lisa Jacobs, UK managing director of accredited lender RLS Funding Circle, welcomed the news of the extension, which she said “has provided small businesses with invaluable funding at a critical time.”

“Many UK SMEs are optimistic about their future, with a third telling us they intend to grow in the coming year. Funding is the key to unlocking these growth plans, and we look forward to continuing to help businesses access the program, create jobs and drive economic recovery. “

This morning, the British Business Bank published data on RLS adoption for the first time, showing that only £ 1.06bn in loans had been made to some 6,200 businesses (actual withdrawal figures were lower , with only £ 822.8million in loans being drawn).

This compares to CBILS and BBLS which have helped facilitate more than £ 80 billion in small business loans throughout 2020 and into early 2021.

“Businesses across the country are starting to look beyond the pandemic to the opportunities available to them in the recovery. The British Business Bank is committed to helping small businesses access the finance they need to grow sustainably in the future, ”said Catherine Lewis La Torre, CEO of the bank.

“By crossing the £ 1billion mark, the Recovery Loan Scheme is demonstrating its impact in helping thousands of businesses finance their future development.

The RLS was also criticized for the slowness at which lenders were accredited, although many lenders had already been accredited for CBILS and BBLS.

Sunak is also expected to add £ 312million to the British Business Bank’s start-up loan program on Wednesday, which equates to loans to an additional 33,000 entrepreneurs to start or grow their businesses.

Read more: Which fintechs offer government-backed payback loans?

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