"A lack of understanding of the Recovery Loan Scheme has meant many businesses are missing the opportunity to secure the finance to grow"
Allica Bank has extended its owner-occupier commercial mortgage offering to include interest-only terms of up to five years.
The new range is supported by the British Business Bank’s Recovery Loan Scheme (RLS), which a business must be eligible for to access the product.
Without the RLS, Allica was only able to offer a short interest-only period at the beginning of a longer-term amortising loan.
The Recovery Loan Scheme is available to accredited lenders, such as Allica, to support loans to eligible businesses that would otherwise be outside of their credit appetite.
Businesses that can benefit must have a turnover of up to £45 million and can include businesses that took out previous government-backed loans (e.g., Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan Scheme (BBLS)). Businesses can access up to £2 million through Allica’s RLS-backed loans, subject to eligibility.
Allica says its broker survey in late-2022 revealed a clear demand for interest-only products among brokers. However, a number of misconceptions about the RLS scheme may have led to some brokers and businesses believing they wouldn’t be eligible.
Nick Baker, chief commercial officer at Allica Bank, said: “A lack of understanding of the Recovery Loan Scheme has meant many businesses are missing the opportunity to secure the finance to grow at a time when the British economy needs growth more than ever. Many business owners, for example, think they can only use an RLS-backed loan to help with recovery from the covid pandemic, but really it can support with all types of situations, such as buying commercial property, acquisitions and refinancing.
“The additional paperwork is also a lot easier than many people realise, with much of the extra admin falling on the lender rather than the borrower.
“We’re delighted to be able to offer interest-only, owner-occupied commercial mortgages with terms of up to five years – which we’re only able to do thanks to the Recovery Loan Scheme (RLS) – as we look to help an even wider pool of businesses achieve their goals.”
