UK Government Backed Loans

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UK Government Backed Loans

Through the pandemic, the UK Government launched several initiatives to support Small and Medium sized businesses. Firstly  there was Coronavirus Business Interruption Loan Scheme (CBILS) and then Bounce Back Loans which are both no longer available.

Recovery Loan Scheme was then launched available through the high Street Banks and a number of “Alternative Finance” lenders. This was extended until 30th June 2022.

It seems that there is going to be a Recovery Loan Scheme 3.0 but as yet we have no further details and no lenders currently to deal with it. We are watching carefully and will update this page once we know more.

For businesses struggling to repay their Bounce Back Loans the flexibility of “Pay as you Grow” may be available.

To see how Sterling Commercial Finance can help please complete the enquiry form.

UK Government Banked Loans Q&As

What types of businesses can we assist?

Our lenders will look to support most businesses that can demonstrate the ability to repay the facility when assessed by them.  Certain sectors can be problematic for example betting, arms trading and manufacture, funding for other finance companies.

The Loan Process

  • Complete our online Application Form – CLICK HERE
  • A Consultant will contact you within 24 working hours, to get a full understanding of your requirements and discuss potential solutions
    We will also request any information we need to approach lenders
  • With the additional information we will prepare and submit proposals to selected Lenders
  • We will help you review offers of finance and support you in selecting the most appropriate solution
  • Your consultant will manage the application through to release of funds

Can new starts be funded?

There is limited support available for new start business especially where there is little in the way of contribution or tangible security – but it always worth asking us.

If for any reason an established business is transferred to a new corporate entity, depending on the circumstances this can be acceptable.

We would usually define an established business as one which is profitable with ideally two years accounts registered at Companies House.

Does it matter where the business is based?

Generally, the business must be based in the UK.  Some lenders do not operate in Scotland (where the law differs) others may not have representation in Northern Ireland.

From our perspective we can fund businesses anywhere in the UK, but common sense and our own geography dictate that we will generally fund deals where we can provide a full service for our client, which as a rule of thumb is usually a maximum of a two-hour drive.

Can loans be drawn in stages?

In some instances, a Loan can be drawn in agreed stages. However, some Lenders raise the total fund for a project at the outset.

How long can I have to pay the Loan back and is there are cost to repaying the loan early?

Some lenders provide only short-term finance while others, if well secured might consider a 12-year term, sometimes longer.  Typically, an unsecured loan would be repaid over five years.

Some lenders will specify early repayment penalties, but many do not. We will guide you through the specific terms quoted by each lender so an informed decision can be made.

What are the interest rates?

Interest rates largely depend on the Lenders perceived view of the level of risk in a transaction. Risk can be mitigated by features such as security, experience, the reserves of the business, sector, customer base etc. A secured loan to a sound established business could very likely be sourced from a high street Bank at a very attractive rate whereas a loan to a start-up business where there is a modest  contribution from the owners and little or no security will be more expensive.

We will usually be able to advise at an early stage what sort of interest rates will be payable in each scenario.

Interest rates are also dependent on the source of capital, some lenders can quote rates linked to Bank of England base rate. However, in the Alternative Finance market rates are usually fixed for the term of the loan and depend on the cost of capital to the Lender.

Most lenders will quote an interest rate that is fixed for the term of the loan, a few will offer a variable rate linked to their own or another effective “base rate”.

Secured Loans – what level of security is required and when should I get the assets valued?

Traditionally a bank would only regard a facility as secured if it held covering security (valued on a written down basis).  However, Lenders in the new Alternative Finance sector do not necessarily seek full security cover and may recognise assets as security that the banks would not.  Some Lenders do not seek formal security and rely on the Personal Guarantees of the directors.

Some Lenders are looking for tangible security typically in the form of property assets while others when lending to Limited companies will seek a Mortgage Debenture to capture assets such as stock and debtors.

Other forms of security:-

  • Charges over specific business’ assets by way of a chattels mortgage.
  • Charges over property held within the business (1st charges preferable)
  • Personal guarantees from the business’ principals possibly with supporting security such as a charge on property.

The better secured propositions invariably receive greater interest from lenders and lower rates.

Valuation – We would urge borrowers not to incur the cost of professional valuations before approaching us. In due course we would expect to agree an appropriate valuer with you and obtain a fee quote for their work. It is essential that the valuer is acceptable to the Lender and that a formal instruction is made by us or more likely the Lender.

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    Discuss your Business Loan needs with David on 0115 9849800 or email

    This site covers Business Finance and Property Finance. Visit Sterling Capital Reserve for our Corporate Finance services

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