Businesses face serious funding problems unless recovery loan scheme rules amended warns banking expert

Many businesses in London and the South East could face major refinancing problems in the latter half of 2022 if the Recovery Loan Scheme (RLS) is not extended beyond the summer and banks continue to refuse to transfer outstanding Coronavirus Business Interruption Loan Schemes (CBILS) when companies refinance, a leading banking expert is warning.

Mark Barrie, Funding and Strategic Partnership Director, Banking and Finance at Azets, is calling upon the Government and British Business Bank to extend the RLS further to the end of 2022 and to insist that lenders accept CBILS transferred under the RLS scheme. Azets is an SME-focused international accounting, tax, audit, advisory and business services group with offices in London and across the South East of England.

RLS is scheduled to end on 30th June 2022 whilst the CBILS scheme ceased in March 2021. Many banks currently require any outstanding CBILS to be repaid before they will consider refinancing applications.

“The current arrangements mean that it is going to be extremely difficult for businesses with outstanding CBILS or RLS funding to secure continued financial support into the second half of 2022 if not before,” said Mark Barrie.

“Businesses funding requirements can change quickly, and the appetite of lenders for risk and funding strategies also change, so the market for refinancing needs to be as accessible as possible. The CBILS and RLS schemes helped protect countless businesses and jobs, but there is a risk that these rigid rules could start creating extensive problems for those same businesses saved by the schemes. Fortunately, a handful of lenders are now considering using the RLS to replace a CBILS facility, but that is only of any value if the RLS scheme is extended for a significant period, ideally to the end of 2022,” he added.

Mark Barrie concluded by encouraging businesses concerned about their CBILS and RLS arrangements to seek early advice. “The recent Budget announcement of an RLS extension to 30 June 2022 is not enough. Hopefully the government and British Business Bank will see the merit of a solid extension to the end of 2022 and insisting that CBILS can be rolled over with any refinancing,” he said.