A Guide to The Recovery Loan Scheme

With several existing Government loan schemes closed, such as CBILS and BBLS, the Recovery Loan Scheme (RLS) is designed to provide further financial aid to UK businesses affected by the pandemic. The scheme, which opened on 6th April 2021, was set up to support businesses of all sizes to restart, recover, and grow as lockdown restrictions gradually come to an end. 

How does RLS work?

Recovery Loans are available through a network of accredited lenders. Through the scheme, lenders can provide up to £10 million per business in the form of a term loan, overdraft, invoice finance, or asset finance.

RLS is different from previous schemes in a few important ways. There are no restrictions on turnover or trading history, so businesses of any size and income can be considered for a loan, and may apply for the maximum loan amount. Recovery Loans also differ from that of BBLS and other closed Government schemes in terms of repayments; once a Recovery Loan has been released, the borrower is responsible for covering the fees upfront, and for paying the interest and loan repayments straight away. 

Here are some key features:

• Businesses can apply for term loans and overdraft facilities of between £25,001 and £10 million once existing loan schemes close.
• Invoice finance and asset finance are available between £1,000 and £10 million.
• Terms of up to 6 years for term loans and asset finance facilities are available, with up to 3 years for overdrafts and invoice finance facilities.
• No personal guarantees are taken on facilities of up to £250,000, and a borrower’s principal private residence cannot be taken as security.
• The exact terms will be determined by the lender and will depend on a business' borrowing proposal.
• Interest rates and fees may vary between lenders.
• The government will offer an 80% guarantee to the lender.

Is my business eligible?

To qualify for a Recovery Loan, your business must:

• Be trading in the UK.
• Be considered viable, or would be viable were it not for the pandemic.
• Have been directly impacted by the pandemic.

Businesses will not be considered eligible if:

• They’re involved in collective insolvency proceedings.
• They’re a bank, building society, insurance company (except insurance brokers), public-sector body, or state-funded school.

Unlike other schemes, there are no requirements for minimum annual turnover or length of trading history. 

Lenders will perform credit and fraud checks, and although they can overlook short-term problems due to the pandemic, each lender's approach may vary. 

You can read more about RLS eligibility here.

How can I apply?

The scheme is open for applications and will close on 31st December 2021, subject to review.

You need to apply directly with an accredited lender. The list of accredited lenders is now available on the British Business Bank website. This list will be updated as new lenders become accredited, so we'd recommend bookmarking the page. A lender won't necessarily provide all the types of finance facility included in the scheme, so be sure to check before you apply. 

You may need to provide certain documents when you apply for an RLS facility. The requirements will vary between lenders, but are likely to include:

• Business plan
• Management accounts
• Historic accounts
• Business assets

What if I've received CBILS or BBLS?

You can still apply for a Recovery Loan if you've already received financial support under previous Government coronavirus schemes, providing you meet the eligibility criteria. The lender may take any outstanding loans into account when assessing affordability, which could limit the maximum amount you can borrow under RLS. 

What other financial support is available?

Recovery Loans are part of a wider package of financial support that was announced in the Spring Budget 2021. We've written a business guide which lists all of the current government schemes available in the UK, along with the financial support available from banks too.

If you need support in the form of business guidance and advice, there are several online resources set up specifically to help you manage your business through the pandemic. It's worth bookmarking our dedicated coronavirus business advice hub, which features articles from experts covering how to keep your business afloat during this time.