In his recent Budget, chancellor Rishi Sunak, outlined a three-part plan to support economic recovery and businesses as we emerge from the pandemic, including the launch of a Recovery Loan Scheme.
The scheme launches for businesses on 6 April and is open until 31 December and, like the Bounce Back Loan Scheme and CBILS, loans will be available through a network of accredited lenders.
Term loans and overdrafts will be available between £25,001 and £10 million per business, while invoice finance and asset finance will be available between £1,000 and £10 million per business.
The government will guarantee 80% of the finance to the lender, no personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
Businesses eligible need to be trading in the UK, viable and solvent, and impacted by the pandemic. Businesses that have already received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under this scheme, if they meet all other eligibility criteria.
For businesses for whom capital and cashflow are key, this will be a vital lifeline. But it’s not the only option.
Outside of government schemes, the commercial lending landscape continues to be competitive and diverse – offering a range of options for businesses. And, if you have self-employed clients, there’s a good chance that they will have a requirement for commercial mortgages, unsecured business loans, asset finance or invoice financing. Not every business will be able to benefit from the government scheme and for some, it may not satisfy their overall borrowing needs. Helping your clients to access commercial finance now, can help them to recover and grow their businesses, and help you to forge stronger relationships.
If you don’t have experience of commercial lending, you can choose to work with a specialist distributor, either by referring a case or working together. This will enable you to access the expertise and products that you need and help you to provide your client with an additional service and diversify your offering.
It’s worth nothing that, while government schemes have generally been the first port of call for commercial lending during the pandemic, these schemes will end – and they will need to be paid back. Accessing competitive business finance from the market will become more important for your clients as the months roll on, and so by talking to them now about, you can start to establish yourself as someone in a position to help then do that.
And, of course, by helping your clients secure commercial finance, you could be helping their business to grow and their personal finances to become stronger, which could in turn increase their appetite for mortgage borrowing in the future.
You clients probably have multiple funding requirements and, while you may not be an expert in all of those, applying this principle to other areas of lending and partnering with a specialist distributor with multiple areas of expertise can help you to provide your clients with a more holistic service, resulting in improved client retention and word of mouth referrals.
So, why not start today, by talking to your self-employed clients about their business cashflow, their eligibility for government schemes and their borrowing requirements for the future.
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