Officials at BEIS are in talks with UK banks over a potential permanent replacement to the various government-backed loan schemes which were introduced to help support businesses during the pandemic, according to the FT today. Over £77bn was lent during the past two years under temporary schemes supported by a government guarantee including the bounce back loan scheme (BBLS) and coronavirus business interruption loan scheme (CBILS). The Recovery Loan Scheme (RLS), which replaced these programmes and has already been extended once by six months, is due to come to an end on 30 June 2022.

While the RLS was intended to help businesses emerging from the pandemic, it is suggested that the potential new scheme will be aimed at supporting growth and the government's "levelling-up" agenda, rather than "recovery". Although the terms of a new scheme, including the level of the government guarantee, remain to be determined, it is likely to be targeted towards small and medium sized enterprises which may struggle to access affordable debt finance. With record inflation, supply chain issues, and pressure on household finances reducing discretionary spending, any support for SMEs will be welcomed. However, with many SMEs already struggling to service high levels of post-Covid debt, directors should be cautious about taking on further liabilities, particularly with the current uncertain economic outlook.