British Business Bank publishes data for its Recovery Loan Scheme

The British Business Bank has published the first performance data for the third iteration of its Recovery Loan Scheme.

The third iteration of the Recovery Loan Scheme was launched in August 2022, supporting the British Business Bank’s ongoing commitment to promote sustainable, accessible funding for UK smaller businesses, enabling them to invest and grow.

Total offered lending for this iteration of the scheme is close to £1.4bn, with more than 6,000 smaller businesses drawing more than £1.15bn of finance so far.

The scheme is successfully targeting the smallest businesses, who are most likely to face barriers in accessing finance.

More than 90% of the guaranteed facilities supported businesses with fewer than 50 employees. Of that 90%, more than 65% of facilities were provided to businesses with fewer than 10 employees.

More than 87% of the guaranteed facilities have gone to businesses with less than £5m turnover.

More than 50% of drawn lending has been designated for business investment and growth purposes, and a third for working capital.

Reinald de Monchy, Managing Director, Guarantee and Wholesale Solutions, British Business Bank, said: “The Recovery Loan Scheme was an important intervention at a critical time for UK smaller businesses. What this data publication demonstrates is just how important it has been to delivering growth and working capital across our Nations and regions, and we are looking forward to its transition to the Growth Guarantee Scheme in Summer 2024.”

The Recovery Loan Scheme is a government-backed credit guarantee scheme designed to support access to finance for UK businesses as they look to invest and grow.

The scheme aims to help smaller businesses across the UK, with turnover of up to £45m, access finance they would have been unlikely to access commercially, on equivalent terms.

Businesses can use the finance for any legitimate business purpose – including managing cashflow, investment in new equipment or vehicles, perhaps to support the transition to net zero, and growth through new products or expansion. However, businesses must be able to afford to take out additional debt finance for these purposes.

It can support facility sizes of up to £2m for borrowers outside the scope of the Northern Ireland Protocol (i.e. the majority of UK businesses). Borrowers in scope of the Northern Ireland Protocol may borrow up to £1m, unless they operate in a sector where aid limits are reduced – in which case the maximum that can be borrowed is lower. These include agriculture, fisheries / aquaculture, and road freight haulage.

The first two phases of the scheme, designed to support access to finance and growth for UK businesses as they recovered from the Covid-19 pandemic, enabled £4.3bn of finance.

The Chancellor of the Exchequer announced in the Spring Budget 2024 that the scheme, which was due to end on 30th June 2024, would be extended for two years until 31st March 2026, and renamed the Growth Guarantee Scheme.