British Business Bank Hails Third Iteration of Recovery Loan Scheme as ‘Important Intervention’

The British Business Bank has published the performance data for the third iteration of its Recovery Loan Scheme, highlighting its effectiveness in driving growth for UK SMEs.

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

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

The British Business Bank revealed that the total offered lending for this iteration surpassed £1.3billion, with over 6,000 smaller UK businesses drawing over £1.15billion of finance so far.

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

Businesses can use the finance for any ‘legitimate business purpose’, such as managing cashflow, investing 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.

Overall, the scheme has been a success in targeting the smallest businesses, as the British Business Bank revealed over 90 per cent of the guaranteed facilities supported businesses with under 50 employees. Of this proportion, over 65 per cent of facilities went to businesses with fewer than 10 employees.

Delivery working capital across the UK

While the scheme supports firms with turnovers of up to £45million, the focus remained on those making less money – over 87 per cent of the guaranteed facilities supported businesses with less than £5million turnover.

Reinald de Monchy, managing director of guarantee and wholesale solutions at 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.”

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

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 £4.3billion of finance.

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