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Budget2024: Recovery Loan Scheme extended to 2026

Anna Sagar
Written By:
Posted:
March 6, 2024
Updated:
March 6, 2024

The Recovery Loan Scheme will be extended until the end of March 2026 and renamed the “Growth Guarantee Scheme”.

The Recovery Loan Scheme is a government-backed loan scheme that aims to support small and medium-sized businesses to “access the finance they need to grow and invest”.

The scheme makes up to £2m available per business group and up to £1m for business groups in the scope of the Northern Ireland protocol.

The government guarantees 70 per cent of the finance to the lender.

In the Budget speech, Chancellor Jeremy Hunt said that he would provide £200m of funding to extend the scheme and it would help 11,000 SMEs access the finance they need.

The Budget report said that the scheme has a £229m of expected loss, which is partially offset by £76m of expected income.

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There are currently 55 accredited lenders of the Recovery Loan Scheme.

 

Recovery Loan Scheme extension ‘welcome move’

Tom Renwick, head of business lending at Atom Bank, said that the extension of the scheme was a “welcome move” from the Chancellor.

He continued: “The scheme had been due to conclude in June 2024, which meant that businesses and lenders faced a hard cliff edge. However, this extension provides lenders with greater confidence around supporting more businesses through the scheme than otherwise would have been the case.

“While the Recovery Loan Scheme, and its predecessor the Coronavirus Business Interruption Lending Scheme (CBILS), were designed to boost support during and in the immediate aftermath of the pandemic, such initiatives have the potential to boost SME lending outside of crisis periods.”

Renwick said that this had been seen in places like the US and Germany, where such schemes “have been deployed to great effect, and without being linked to an economic crisis”.

“Research by Frontier Economics has suggested that evolving these schemes to provide more long-term support to SMEs would boost the level of lending to these businesses by almost five per cent, which would substantially improve the position of the nation’s SMEs, stimulating job creation and economic growth.

“Smaller businesses already face a host of challenges, holding back their potential – long-term funding support could make a real difference in overcoming those hurdles and boosting the economy as a whole,” he said.