Recovery Loan Scheme UK

Set to end July 2024, the latest version of the Government-backed Recovery Loan Scheme (RLS) supported business growth with up to £2 million in finance. For support post-July 2024, head to our Growth Guarantee Scheme page.

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Recovery Loan Scheme UK

What was the Recovery Loan Scheme?

The RLS was a government-backed scheme that provided businesses with access to finance for investment and growth.. It offered facilities of up to £2 million for eligible businesses outside the “Northern Ireland Protocol”, and up to £1 million for eligible businesses inside the “Northern Ireland Protocol”.

Over 50 accredited lenders offered RLS facilities with terms of up to six years. The government offered lenders a 70% guarantee against the balance of the loan. The Recovery Loan Scheme will end 1st July 2024.

The RLS launched on 1 April 2021 to help businesses recover from the impact of the Covid-19 pandemic. It replaced the CBILS, CLBILS and BBLS. Loans of up to £10m were available and the government guarantee stood at 80%. 

In 2022, the RLS was amended, with up to £2m available to SMEs and a 70% government guarantee. Although the scheme ended in June 2022, it was soon relaunched for another two years to help SMEs raise finance.

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How did the Recovery Loan Scheme work?

The RLS offered business finance in the following forms: term loans, overdrafts, asset finance and invoice finance. (However, it’s worth noting that not all lenders were able to offer all finance types). Anyone who took out an RLS facility was 100% liable for the debt. 

When applying for an RLS loan, applicants were typically required to provide two years of financial and management business accounts, as well as bank statements and cash flow forecasts. The speed from application to drawdown depended on the individual application.  

How much could applicants borrow?

Up to £2 million was available to each business group for borrowers outside the scope of the “Northern Ireland Protocol"; up to £1 million was available to each business group inside the scope of the protocol. 

Minimum facility sizes also applied: asset and invoice finance started at £1,000 per facility, with term loans and overdrafts starting at £25,001.

What can the funds be used for?

Applicants could use their RLS finance for any legitimate business purpose, such as:

  • Cash flow management

  • Growing your business

  • Investing in an area of your business

  • Paying for a one-off expense

  • Purchasing equipment 

  • Supporting payroll

What was the Recovery Loan Scheme interest rate?

The interest rate and fees on an RLS facility depended on the lender and the applicant's individual circumstances. According to the British Business Bank, the annual effective rate of interest and upfront and other fees couldn’t exceed 14.99%. 

What term lengths were available?

Term lengths depended on the type of finance facility chosen. 

For term loans and asset finance, the minimum term length was three months and the maximum term length was six years. For overdrafts and invoice finance, the minimum term length was three months and the maximum term length was three years.

Can I apply for the Recovery Loan Scheme if my business had a Bounce Back Loan or borrowed under CBILS or CLBILS?

Yes, up until July 1st 2024, you can apply if your business has other business recovery loans, such as the BBLS, CBILS, CLBILS or RLS facility (however, in some instances it might reduce the amount your business can borrow). 

The lender will carry out their standard credit and fraud checks. 

Will I need a personal guarantee?

Personal guarantees can be taken at the lender’s discretion, as per its usual lending practices. Principal Private Residences can’t be taken as security under the RLS. Also, if the lender can offer finance on normal commercial terms without having to use the scheme, it might do so.

Is my business eligible for an RLS loan?

To obtain an RLS loan you must apply before 1st July 2024. Furthermore, recovery Loan Scheme eligibility depends on a number of factors. Your business must:

  • Have a turnover of up to £45m (on a group basis, where part of a group)

  • Be carrying out trading activity in the UK and, in the majority of cases, generating more than 50% of income from trading activity

  • Have a viable business proposition (the lender may disregard concerns over your business’s short-to-medium term business performance due to the uncertainty and impact of Covid-19)

Your business is not eligible if:

  • It is a ‘business in difficulty’, e.g it cannot be in relevant insolvency proceedings

You will also be required to confirm that the RLS facility you’re applying for won’t push your business over the maximum amount of subsidy it can receive. 

As long as you meet the eligibility criteria, you can apply to the RLS if you are a:

  • Sole trader

  • Corporation

  • Limited partnership

  • Limited liability partnership

  • Co-operative and community benefit society

  • Any other legal entity carrying out business activity in the UK

What other options are there?

If you’ve missed the 1st July 2024 deadline, there are plenty of other options to support your business goals including a similar scheme called the Growth Guarantee Scheme. You can find out more about this scheme by clicking here. Alternatively, we can help match you with term loans, overdrafts, asset finance and invoice finance, as well as:

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Simon Cureton

Chief Executive Officer

Simon has been Chief Executive Officer at Funding Options since 2019, spearheading its transformation into a leading fintech with the launch of its Funding Cloud platform. Simon has over 27 years of experience in financial services, having held senior posts at some of the biggest players in the industry all over the world.

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