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Recovery Loan Scheme Opens to Support UK Businesses Recover From Covid-19

The Recovery Loan Scheme, a new scheme to support access to finance for UK businesses as they recover and grow following the pandemic, opens to applications from 6 March 2021. The scheme, announced at the Budget on 3 March 2021, is scheduled to run until 31 December 2021, subject to review.

The new scheme will support borrowing of up to £10million for individual businesses and up to £30million across a group, and, once received, the funds can be used for any legitimate business purpose, including managing cash flow, growth and investment. It is designed to appeal to businesses that can afford to take out additional finance for these purposes.

The British Business Bank, which will administer the scheme on behalf of the Government, played an important role during the pandemic, by administering the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS). The new Recovery Loan Scheme will continue to support smaller businesses as they steer a path towards a sustainable recovery.

Scheme features include:

  • Up to ┬ú10m facility per business:┬áThe maximum amount of a facility provided under the scheme is ┬ú10m per business (maximum ┬ú30m per group). Minimum facility sizes vary, starting at ┬ú1,000 for asset and invoice finance, and ┬ú25,001 for term loans and overdrafts.
  • Wide range of products:┬áBusinesses can choose from term loans, overdrafts, asset finance and invoice finance┬á(subject to the lender being accredited for each of these finance types).
  • Term length:┬áTerm loans and asset finance facilities are available from three months up to six years, with overdrafts and invoice finance available from three months up to three years.
  • Interest and fees to be paid by the business from the outset:┬áBusinesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
  • Access to multiple schemes:┬áBusinesses 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.
  • Pricing:┬áThe annual effective rate of interest and upfront and other fees cannot be more than 14.99%.
  • Personal Guarantees:┬áPersonal guarantees are not permitted for facilities of ┬ú250,000 or less. Above ┬ú250,000 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.
  • Recovery Loan Scheme-backed facilities are provided at the discretion of the lender.
  • Guarantee to the lender:┬áThe 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 include:

  • Covid-19 impact:┬áThe borrower must confirm to the lender that it has been impacted by Covid-19.
  • UK-based:┬áThe borrower must be carrying out trading activity in the UK.
  • Viability test:┬áThe 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:┬áLenders are required to undertake credit and fraud checks for all applicants, as well as customary checks such as Know Your Customer and Anti-Money Laundering. The checks and approach may vary between lenders.
  • Turnover limit:┬áThere is no turnover restriction for businesses accessing the scheme.

How to apply

Lenders previously accredited to provide CBILS have been invited to apply for accreditation for the Recovery Loan Scheme. Once accredited, lenders under the scheme will be listed on the British Business Bank website, and we expect to add many more lenders over the coming weeks.

In the first instance, businesses should approach their own finance provider ÔÇô ideally via the lenderÔÇÖs website. They may also consider approaching other lenders if they are unable to access the finance they need.

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


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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