The Treasury is considering extending the recovery loan scheme (RLS) past its 31 December deadline.
The government-backed loan scheme – which is a successor to previous state support measures such as the coronavirus interruption loan scheme – was launched on 6 April to help businesses recover from the pandemic.
The scheme is meant to close at the end of the year, but the Treasury is mulling an extension to the scheme with terms that are less generous for firms, according to The Daily Telegraph.
Officials are reportedly set to talk with banks over the next month to decide whether to continue the scheme and whether to adjust the terms.
Potential options including reducing the government guarantee to cut down on potential losses that taxpayers could suffer from unpaid debt.
A Whitehall source cited by The Daily Telegraph said the scheme’s future is being discussed ahead of the Budget this month, but a decision by ministers could arrive later.
“We have provided over £79bn to 1.6 million businesses through our government-backed Covid loans, including the RLS, to ensure firms had finance they needed throughout the pandemic,” a Treasury spokesperson told The Daily Telegraph.
Chancellor Rishi Sunak (pictured) unveiled the Covid support scheme in his March Budget, which provides loans between £25,000 and £10m to businesses, with 80 per cent of the loan’s value guaranteed by the government.
From the start it was made clear that the scheme was set to run until the end of the year, subject to a review.
A number of alternative lenders have been accredited to deliver RLS loans including ThinCats and MarketFinance, as well as peer-to-peer lending platforms Funding Circle and Assetz Capital. Peer2Peer Finance News understands at least one more P2P lender is awaiting approval for the scheme.
The British Business Bank declined to comment.