Government’s £4.5 billion Recovery Loan Scheme extended

The Business Secretary, Kwasi Kwarteng, has announced the Recovery Loan Scheme (RLS) will be extended by a further two years, running until 30 June 2024.

Launched in April 2021, the vital government-backed scheme helps small-and-medium-sized businesses (SMEs) recover from the Covid-19 pandemic.

With small businesses facing a looming recession and confidence hitting record lows – 75% of SMEs expect no growth over the next quarter – the extended support comes at a crucial time for many.

Kwasi stated: “Small businesses are the lifeblood of the British economy, which is why we are determined to support our traders and entrepreneurs in dealing with worldwide inflationary pressures.

“The extension of the Recovery Loan Scheme will help ensure we continue to provide much-needed finance to thousands of small businesses across the country, while stimulating local communities, creating jobs and driving economic growth in the UK.”

What does the Recovery Loan Scheme offer?

The scheme offers SMEs access to finance, aiding their recovery and growth following the disruption caused by the pandemic.

Giving lenders a government-backed guarantee against the outstanding balance of the facility, the scheme helps SMEs gain access to business-saving loans.

Figures from the Government show that almost 19,000 businesses have accessed the scheme with an average of £202,000 in support.

The news has been received well by trade bodies, commenting on Twitter, the CBI said: “We called for action, today we got it. We're delighted with this announcement. Recovery Loan Scheme = critical lifeline for firms to ensure access to finance so biz can #GoForGrowth.”

Shevaun Haviland, Director General of the British Chambers of Commerce, also commented, saying: “After two years of pandemic disruption and with a faltering global economy, the two-year extension to the Recovery Loan Scheme will be a lifeline for many businesses facing a rising tide of costs.

Learn more about the scheme here.

Is the extension enough?

With rapidly rising costs of essentials such as fuel and energy, it poses the question: will the scheme extension be enough to save businesses?

The support package offers businesses an initial boost, helping them sustain operations during these difficult times but will it spark the investment needed so businesses can go for growth?

When profitability is under threat, SMEs must avoid the instinct to retrench and instead continue to invest in growth.

The nimbler a business can become, the more likely they are to be able to survive, for example, digital organisations have a lower cost base and thus gain a competitive advantage.

Technology not only cuts costs but frees staff up to focus on more value-added work.

Businesses taking advantage of the RLS extension, should think strategically and perhaps assign resources to a very small number of priorities.

If you think that updating your business strategy might be required, check out our recent blog here.