Here are our predictions for what will happen after the scheme finsihes this year.

The RLS has already been extended once, from 31st December 2021 to 30th June 2022, and it has been mooted that there may be another further extension yet. With over 70 lenders on board and a steady stream of RLS loans still being approved, demand would suggest there is still a need for this product. Watch this space!

We had a meeting this week with one lender who informed that talks were ongoing about a replacement for the RLS currently under review by the Government. No terms have, as yet, been released but this would imply that the Government recognise that without further encouragement on their part, the debt market place (for SMEs in particular) could start to shrink.

Without an accessible Government-backed loan product on the table. The Government may determine that it has propped up the business community enough over the last 2+ years and now it is time to start recouping those monies rather than lending more into this space. There are pros and cons of ending the RLS and the decision would be made much easier if macro-economic circumstances were not as turbulent and fragile as they currently stand.

Over the last 2+ years, high-street banks have lent multiple times their annual average and are now working hard to secure repayments; market share that alternative lenders started to occupy after 2008 has accelerated and borrowers are more comfortable with paying a premium for more accessible debt without the ongoing management and financial information requirements; debt is now commonplace amongst a high proportion of SMEs that had previously never considered or required taking it on pre-Covid.

The Chancellor has to make a big decision on the RLS in the coming months that will impact the market as a whole. One thing is certain and that is that the debt landscape has changed for good due to Covid’19: demonstrating strong entrepreneurial skills (adaptability/innovation/resilience) will determine the winners of tomorrow.