Owners of smaller businesses are being warned that the stringent rules on eligibility for the Recovery Loan Scheme (RLS) could shut them out.

This warning comes from Purbeck Personal Guarantee Insurance, and it is basing its assessment on the estimated £12 billion that will be provided via the scheme. It points out that this sum does not even add up to 20% of the amount that the government has provided via its Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) in the year since the pandemic started.

Purbeck points out that, as the total amount being paid out through the RLS is so much less, the criteria for eligibility is likely to be tougher to meet. The insurer is predicting that approvals for these loans will be around 42% of the number of approvals for the CBILS.

However, it also suggests that the lenders will impose strict checks on affordability and will determine the maximum amount for each firm based on how much they received via the two earlier loan schemes. Speaking to Peer2Peer Finance News, Todd Davison from Purbeck said:

“The RLS is a welcome move but it is an entirely different proposition to the government backed schemes that went before, with much greater emphasis on affordability.”

Davison concluded by saying that those not eligible for the RLS would need to look at other financing options. A small business accountant from Goole or elsewhere could help them put together a plan for securing outside investment.