What is it?

The Recovery Loan Scheme (RLS) is a new loan scheme put in place by the Government, to support UK businesses with access to finance as they try to grow and recover from disruption caused by the COVID-19 pandemic.

It was first announced by the Chancellor, in the latest Budget.

What is the offering?

Businesses can access loans and other types of finance up to £10 million per business, following the closure of existing loan schemes:

  • Invoice finance (for up to three years) and asset finance (for up to six years) available between £1,000 and £10 million per business
  • Term loans (for up to six years) and overdrafts (for up to three years) available between £25,001 and £10 million per business

A number of accredited lenders who are involved can be seen here. All lenders are accredited by the British Business Bank and any new lenders under the scheme will fall under this list as and when they become accredited. As always, first approach your own finance provider when looking to borrow.

Note: those involved will be asked not to take personal guarantees or secure the lending on the borrowers home. RLS gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you are always fully liable.

The finance provided is to be used for any legitimate business purpose only; growth and investment included.

80% of the finance to the lender is guaranteed by the Government, to ensure the lender has the confidence to continue to lend to businesses.

Is there an interest rate?

Yes. Interest is expected to be capped at 15%.

Who is eligible?

The RLS is open for businesses of any size though there are some criteria to match:

  • The business must be trading within the UK
  • You must show that your business is viable or would be viable, if it was not for the pandemic
  • There must be proof that your business has been impacted by the coronavirus pandemic
  • Your business must not be in any insolvency proceedings
  • Open for all businesses excluding state-funded primary and secondary schools, public-sector bodies, banks, building societies, insures and re-insurers

Note: even if your business has accessed previous COVID-19 guaranteed loan schemes i.e. CBILS, CLBILS and/or Bounce Back Loans, you can still apply and be eligible if you meet the above criteria, just the amount you are able to borrow will depend on the scheme requirements and the lender’s assessment of your business.

For more information on the RLS, visit the Government website here and find an overview from the British Business Bank.