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• 20 Jun

  Boost Your Invoice Finance Prepayment Percentage With The Recovery Loan Scheme RLS

  

  NOTE: THE GROWTH GUARANTEE SCHEME HAS NOW SUCCEEDED RLS

  Prepayment percentages drive the amount of funding that is released by an invoice financing arrangement. The higher the percentage the more money is released from your sales ledger.

  Prepayment Percentage

  The prepayment percentage (sometimes called the initial payment percentage or early payment percentage) is set when you take out your facility. Typically, it can be 80 to 85% for many clients although it will vary between providers and according to the sector that you operate within.

  Boost Your Invoice Finance Prepayment Percentage With The Recovery Loan Scheme RLS 3

  We have just met with one of the invoice finance companies that we work with and they described an innovative approach to boosting the invoice finance prepayment percentage that customers receive. This is by using the Recovery Loan Scheme (RLS 3) a scheme offered by the British Business Bank, backed by the UK Government.

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  They have found this particularly useful when supporting acquisitions (where one party is seeking to buy a business, company or its assets).

  RLS3 Recovery Loan Scheme

  RLS3 is a government-backed scheme to help get small and medium-sized businesses back on their feet after the pandemic. The UK government provides a partial guarantee to support the additional lending which enables the funder to offer more money to the customer than they otherwise would.

  There are two uses for this additional funding:

  1. RLS Top Up For Invoice Finance - To top up the invoice financing prepayment facility. Where a funder might only provide say an 80% prepayment percentage, the RLS3 may enable them to offer say 95% for a period of time. This can be up to 3 years. Typically, the prepayment percentage may be increased for say 2 years and then traded back down to the normal level in year 3.
     
     
  2. RLS Loan - to provide a business loan which may be in addition to the top-up facility. This can be offered at an attractive rate.

  Boosting Your Invoice Finance Prepayments

  The first option can be used to increase your prepayment percentage and release more cash.

  Typically, this funder would be seeking to help businesses that are turning over £1M pa or more and there are some stipulations about how much the company has received in other covid related government subsidies. If you think this might be helpful to your UK company, please get in touch and we will introduce you to this funder for a quote.

  By Glenn Blackman