Businesses are being warned to “act sooner rather than later” if they want to access finance rather than relying on the extension to the recovery loan scheme (RLS).
The RLS was set to be closed at the end of this year, but Chancellor Rishi Sunak announced in his Autumn Budget that it will instead run until 30 June 2022, with changes made to the scheme.
Business finance aggregator platform Swoop has urged firms to avoid waiting as they may face extra costs from the next Budget, and warned that the changes to RLS might mean that lenders are more reluctant to lend.
From January 2022, RLS finance available to businesses will drop from up to a maximum of £10m per company to a maximum of £2m, and the government guarantee will be reduced from 80 per cent to 70 per cent of the value of each loan.
“Swoop welcomes the change as many businesses still require government help to return to pre-pandemic levels of turnover, but there are changes to the scheme which will mean that lenders may not be as willing to lend as they once were,” Swoop said.
“Individually these changes might not mean much but together, it could be significantly harder for small – and medium-sized enterprises to win finance in 2022.
“Another reason to act sooner rather than later is that the next Budget may see tax hikes for businesses, putting the squeeze on finances for many.
“If you wait until next year for funding, you may find that you are one among many after the same limited supply of funds.”