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Government urged to extend Recovery Loan Scheme

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Fast-growing accountancy firm Azets has called on the government to reconsider their stance on the Recovery Loan Scheme (RLS) and Coronavirus Business Interruption Loan Scheme (CBILS) if they want businesses to weather the next year.

12th Nov 2021
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Businesses could be in for a tricky summer of major refinancing issues if banks continue to refuse to transfer outstanding loans received under CBILS when companies refinance and the Recovery Loan Scheme (RLS) is not extended beyond the latter half of 2022, according to a leading bank expert.

Murdoch MacLennan, banking partner with SME focused international accounting group Azets, is asking for the government to reconsider their stance on the RLS, with an appeal to extend the scheme further. He is also calling for lenders to accept CBILS transferred under the scheme in aid of keeping businesses afloat throughout the next year.

As it stands, RLS is set to end on 30 June 2022 while CBILS has long since passed, ending in March of this year. A large number of banks currently require any outstanding CBILS to be repaid before they will even consider refinancing applications.

Funding requirements change quickly

“The current arrangements mean that it is going to be extremely difficult for businesses with outstanding CBILS or RLS funding to secure continued financial support into the second half of 2022 if not before,” MacLennan commented. 

“Businesses' funding requirements can change quickly, and lenders' appetite for risk and funding strategies also change, so the market for refinancing needs to be as accessible as possible. The CBILS and RLS schemes helped protect countless businesses and jobs, but there is a risk that these rigid rules could start creating extensive problems for those same businesses saved by the schemes.

“Fortunately, a handful of lenders are now considering using the RLS to replace a CBILS facility, but that is only of any value if the RLS scheme is extended for a significant period, ideally to the end of 2022.”

More support for an extension

CEO of Next Level Business Paul Layte is also on board: “I would certainly support an extension to the scheme as particularly SME’s suffer from delayed impacts, confidence issues relating to get going again and general uncertainty regarding their financial position which I think will last well into 2022 and possibly beyond,” he told AccountingWEB.

“A good example is a client of ours who purchased imported goods for their e-commerce business, freight is so much slower now and more expensive that they need to order 50% more stock than before to compensate which costs a lot of money.”

For any business concerned about CBILS and RLS arrangements, MacLennan strongly encourages to seek early advice.

“The recent Budget announcement of an RLS extension to 30 June 2022 is not enough. Hopefully the government and British Business Bank will see the merit of a solid extension to the end of 2022 and insisting that CBILS can be rolled over with any refinancing.”

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