Allica Bank has extended its owner-occupier commercial mortgage range to cover interest-only terms of up to five years under the British Business Bank’s Recovery Loan Scheme.    

The business bank says firms eligible for the loan of up to £2m, must have a turnover of up to £45m.  

The new loan is currently priced at 25% basis points lower than the firm’s full commercial five-year fixed-rate owner occupier loan, on a fully amortising basis. This prices it at 8% up to 70% loan to value, and 8.3% above that. 

The lender says the Recovery Loan Scheme, allows it to support a greater number of established small and medium-sized businesses with their expansion plans and “has remained an untapped opportunity, with many business owners not realising they can benefit from it”.  

It points out that without the programme it was only able to offer a short interest-only period at the beginning of a longer-term amortising loan, adding that the scheme allows it to lend to “eligible businesses that would otherwise be outside of its appetite”.   

It adds that firms can take out this loan even if they have taken out previous government-backed loans — such as the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS).  

Allica Bank chief commercial officer Nick Baker says: “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 a Recovery Loan Scheme-backed loan to help with recovery from the Covid-19 pandemic, but really it can support 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.”