What is the Recovery Loan Scheme?

The Recovery Loan Scheme (RLS) launched on 6 April 2021 and supports access to finance for UK businesses as they recover and grow following the Covid-19 pandemic.

RLS aims to help businesses affected by Covid-19 and can be used for business purposes, including, managing cashflow, investment and growth. It is designed to support businesses that can afford to take out additional finance for these purposes. Businesses who have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme.

A key aim of the Recovery Loan Scheme is to improve the terms on offer to businesses, but if a lender can offer a business the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.

At Autumn Budget 2021, the government announced that the Recovery Loan Scheme will be extended by six months to 30 June 2022, with changes applying to all offers made from the 1 January 2022.

Scheme Features

• Minimum facility size: Starts at £25,001 for term loans.
• Up to £2m facility per business: The maximum amount of a facility provided under the scheme is £2m per business (maximum £6m per group).
• Term length: Term loans are available for up to six years.
• Interest and fees to be paid by the borrower from the outset: Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility. Interest rates in respect of borrowing are individually negotiated and the amount you are charged will depend on your circumstances. Speak to your relationship manager for more information.
• Access to multiple Covid-19 schemes: Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS.
• Personal Guarantees: Personal guarantees are not permitted for facilities of £250,000 or less. Above £250,000 the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied. No personal guarantees can be held over Principal Private Residences.
• Guarantee to the Lender: The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility. The borrower always remains 100% liable for the debt.

Eligibility criteria

• Covid-19 impact: The borrower must confirm to the lender that it has been impacted by Covid-19.
• UK-based: The borrower must be carrying out trading activity in the UK.
• Eligibility & Viability test: All loans are subject to a normal eligibility and viability assessment. The lender will consider that the borrower has a viable business proposition but may disregard any concerns over its short-to-medium term business performance due to the uncertainty and impact of Covid-19.
• Credit and fraud checks for all applicants: We will undertake a full credit assessment and fraud checks for all applicants. Financial accounts and cashflow projections will be required in line with normal process. Checks and approach may vary between lenders.
• Turnover limit: Businesses with a turnover not exceeding £45m per annum.

Please note, the following are not eligible under RLS: Banks, Building Societies, Insurers and Reinsurers (excluding Insurance Brokers), public sector bodies, state funded primary and secondary schools.

Business Finance Support

The British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cashflow and a list of independent advice services