ThinCats chief executive Ravi Anand has predicted that alternative lenders will participate in the Payback Loan Program (RLS) as traditional lenders are busy with bad debts.
The payback loan program, which was announced by Chancellor Rishi Sunak in his March 2021 budget, open to applications yesterday.
The new program is expected to run until December 31, 2021, subject to review and replaces the Coronavirus Business Interruption Loan Program (CBILS), Bounce Loan Program (BBLS) and Loan Program for major business interruption against the coronavirus (CLBILS) which all ended on March 31. .
The maximum amount foreseen under the program is £ 10 million per company and £ 30 million per group. Minimum facility sizes vary, from £ 1,000 for asset and bill funding, to £ 25,001 for term loans and overdrafts.
Anand, managing director of ThinCats, who previously participated in CBILS and was therefore one of the lenders invited by the British Business Bank to apply for accreditation with the RLS, said alternative lenders will play an important role in the new program. .
“We see a lot of companies, especially tech and service companies, doing well, growing quickly and looking for debt,” she said.
“RLS guarantees that lenders will have a greater appetite for these loans at lower interest rates. Many viable businesses are bracing for a strong rebound in general demand for goods and services, but need capital to invest or replenish working capital. The RLS provides crucial support to encourage lending to those businesses whose sectors such as recreation are more likely to receive capital.
“Unlike CBILS or CLBILS, RLS is more flexible and supports broader lending activities such as acquisitions and growth. Mergers and acquisitions have naturally been calmer over the past 12 months, but demand is pent up and the RLS supports much needed business activity that drives economic growth.
“I would be interested to see the banks’ appetite. RLS loans require a full credit analysis, and quite frankly, banks will soon have to think about collections once businesses start paying interest on BBLS and CBILS. As a result, it is likely that we will see alternative lenders fill the void and private equity will be very active.
“On the negative side, a number of small and medium-sized businesses that have survived only on support schemes are unfortunately at risk of failing and we will see a ‘catching-up’ peak in bankruptcies in 2022.”