Many Midlands businesses could face major refinancing problems in the latter half of 2022 if the Recovery Loan Scheme (RLS) is not extended beyond the summer and banks continue to refuse to transfer outstanding CBILS when companies refinance, two leading banking experts are warning.

Mark Huddlestone and Chris Briggs, Banking & Finance Directors with Azets, are calling upon the Government and British Business Bank to extend the RLS further to the end of 2022 and to insist that lenders accept CBILS transferred under the RLS scheme.

RLS is scheduled to end on 30 June 2022 whilst the CBILS scheme ceased in March 2021. Many banks currently require any outstanding CBILS to be repaid before they will consider refinancing applications.

“The current arrangements mean that it is going to be extremely difficult for businesses with outstanding CBILS or RLS funding to secure continued financial support into the second half of 2022 if not before,” said Mark Huddlestone.

“Businesses funding requirements can change quickly, and lenders appetite for risk and funding strategies also change, so the market for refinancing needs to be as accessible as possible. The CBILS and RLS schemes helped protect countless businesses and jobs, but there is a risk that these rigid rules could start creating extensive problems for those same businesses saved by the schemes.”

Chris Briggs is encouraging businesses concerned about their CBILS and RLS arrangements to seek early advice.

He said: “Fortunately, a handful of lenders are now considering using the RLS to replace a CBILS facility, but that is only of any value if the RLS scheme is extended for a significant period, ideally to the end of 2022.”

“The recent Budget announcement of an RLS extension to 30 June 2022 is not enough. Hopefully the government and British Business Bank will see the merit of a solid extension to the end of 2022 and insist that CBILS can be rolled over with any refinancing.”