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Apply for Covid loan before June deadline, urges SME specialist

Covid loans and support measures will soon be over, apply if you are eligible.
Covid loans and support measures will soon be over, apply if you are eligible.

Scottish businesses affected by Covid are being urged to apply for help from the Recovery Loan Scheme (RLS), worth up to £2 million, before it ends on June 30.

The loans are available to companies affected by the coronavirus and whose turnover is less than £45m, with 70% of the funding underwritten by the UK Government.

But the fast-approaching deadline is concentrating minds.

The finance may be used for any legitimate purpose, including cashflow, investment and growth, but the business must be able to afford the additional debt finance required.

RLS is available through lenders accredited by the British Business Bank and more than £1 billion has already been offered to small and medium-sized enterprises (SMEs) through the scheme.

Azets partner Nicola Campbell.

“It can take around six weeks to process an RLS application so anyone considering this option should start taking action now,” said Azets partner and SME specialist, Nicola Campbell.

Securing a more traditional bank loan can be difficult, notes Azets, particularly if a business is struggling with paying back other Covid loans, as well as rising costs and taxes.

With negotiation, it should be possible to secure an RLS loan at around 5%.

The company added the RLS offers “a very attractive and accessible funding solution” to SMEs trying to secure finance in a difficult market.

Super-deduction

Azets also highlighted the attractions of the “super-deduction” for capital allowances.

It gives firms 130% relief on qualifying plant and machinery expenditure through to March 31 2023.

Ms Campbell added: “SMEs could secure an RLS loan, invest in the business and further benefit from generous capital allowances of 130%.

“It is a great opportunity to borrow, invest and save, and it is unlikely we will see such an attractive incentive again.

“Covid loans and support measures will soon be over and while there are affordability checks applicable to the RLS, it is one of the most attractive funding options currently available.”

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