The government’s Recovery Loan Scheme (RLS) aims to support UK businesses as they recover from the Covid-19 pandemic, with lending of up to £2m
The UK government launched the Recovery Loan Scheme (RLS) in April 2021 with the aim of supporting access to finance for UK businesses as they recover from the Covid-19 pandemic.
The RLS was originally intended to run until the end of 2021, subject to a review. In the Autumn Budget 2021 the government announced it would be extending the scheme until June 2022. The revamped RLS scheme took effect on 1 January 2022, with a lower maximum amount available to businesses (£2m) and a lower government guarantee (70%). You’ll find the changes summarised below.
There are now more than 70 accredited lenders, offering lending for up to six years. Swoop can also now offer a 12-month, interest-only loan of up to £250,000 through our platform.
Whether you’re looking to refinance loans you took out during the pandemic or you need extra cash to realise your growth plans, it’s easy to find out what you might qualify for by registering with Swoop.
NOTE TO ADVISORS: As the payment holidays for CBILS loans are ending, refinancing to products such as the 12-month interest-only loan may be an attractive way for your client to buy time.
What is the Recovery Loan Scheme (RLS)?
When does the Recovery Loan Scheme start and end?
When do I need to pay the money back?
How does the Recovery Loan Scheme differ from the schemes it replaces?
What is the government guarantee?
What can the funds be used for?
Can I refinance my BBLS or CBILS loan, in part or in full?
Can I get a Recovery Loan with bad credit?
Can a sole trader access the Recovery Loan Scheme?
Which lenders are taking part in the new Recovery Loan Scheme?
When was the scheme announced?
What other government-backed finance schemes are available to businesses post-Covid?
Tips for applying for the Recovery Loan Scheme
Mistakes to avoid when applying
What do I do if I’ve been rejected for the Recovery Loan Scheme?
Will I need a credit check to apply for the Recovery Loan Scheme?
The Recovery Loan Scheme (RLS) is a government scheme aimed at supporting access to finance for UK businesses amidst the Covid-19 pandemic.
It replaced the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large
Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS), all of which closed to new applicants on 31 March 2021.
RLS is designed can be used for business purposes, for example, managing cashflow, investment and growth. If your business has taken out a CBILS, CLBILS or BBLS facility you are still able to access the latest scheme.
Bear in mind that the Recovery Loan Scheme exists to improve the loan terms available to your
business. These terms reflect the protection that the 70% government guarantee offers to enders. If, however, Swoop can point you towards commercial loans with better terms – or towards other types of lending – we can do so once you register with us.
The Recovery Loan Scheme (RLS) launched on 6 April 2021 and was set to close at the end of 2021. In the Autumn Budget 2021, the Treasury announced it was extending the scheme for six months (until June 31 2022), albeit but with a reduced maximum amount available to businesses and lower government guarantee (see below).
UK businesses of any size can apply for a loan or overdraft. This is the main difference between the Recovery Loan Scheme (RLS) and the coronavirus finance support schemes it replaces (BBLS, CBILS, CLBILS). With the RLS there are no restrictions on turnover – at least until 1 January 2022, when the scheme will be open only to small and medium-sized enterprises (SMEs), as announced in the Autumn Budget, 2021.
Your business must however meet certain criteria in order to access the scheme. Specifically, your business must:
If a lender can offer finance on normal commercial terms without the need to make use of the scheme, they may do so.
Three more things to note:
Yes, your business can apply for finance under the Recovery Loan Scheme (RLS) even if you’ve borrowed under BBLS, CBILS or CLBILS. You might be able to borrow more under the RLS than you have already – though the maximum you can borrow will depend on your lender’s assessment and the scheme requirements.
The amount your business can borrow under the Recovery Loan Scheme depends which type of finance you choose. After 1 January 2022 the revamped scheme allows you to borrow up to a maximum of £2m per business for all types of borrowing, i.e. term loans, overdrafts, invoice finance and asset finance.
The good news is that interest rates for Recovery Loan Scheme are capped at 15 per cent (a lesson learned from the Bounce Back Loan Scheme). As you’d expect, the interest rates you might be offered will depend on the lender and on your business circumstances.
Term lengths depend on the type of finance (product) you choose.
There are two key differences:
The UK Government gives lenders an 80% guarantee for applications made for the Recovery Loan Scheme – until the end of 2021. The revamped scheme, announced at the Autumn Budget 2021 will see the government reducing the guarantee to 70% for applications made on or after 1 January 2022.
The guarantee means that if a business defaults on the loan, the lender can recoup 80% of the outstanding value of the loan from the government (or 70% for applications made on or after 1 January 2021). This guarantee gives lenders confidence to lend to businesses. As the borrower, you are always 100% liable for the debt.
If your application is successful you can use your Recovery Loan Scheme finance for any legitimate business purpose, for example:
Yes, if your total financing needs (including any increase) are greater than the minimum facility sizes available under RLS, you can refinance your BBLS or CBILS loan with a Recovery Loan.
If you do re-finance, it will treated as a new application for RLS and will need to meet the scheme’s eligibility criteria. You can re-finance through your existing lender or apply to a different accredited lender.
Since there is no Business Interruption Payment (BIP) under RLS, if you re-finance a BBLS or CBILS facility (partially or in full) you’ll have to forego your remaining BIP entitlement (up to a maximum of 12 months from the outset of the original facility) as part of the re-financing process.
If you have a Bounce Back Loan and are able to refinance under RLS, be aware that borrower protections and scheme eligibility (and terms) under these schemes differ.
The total amount you can borrow, including any additional lending you secure via the re-financing of an existing facility, will depend on two things: a lender’s affordability assessment and the requirements of the scheme.
As you’d expect, if you have bad credit, you might have fewer Recovery Loan options available to you and the interest rate you can secure is likely to be higher.
That said, even if you’ve been refused credit in the past, you might still be able to apply for the Recovery Loan Scheme. Lenders review each application on their own merits, i.e. on a case-by-case basis, so it may be worth applying, just in case.
Aside from the RLS, you should explore all the finance options available to your business.
Yes, sole traders can apply for the Recovery Loan Scheme.
In fact, as long as a business satisfies the other eligibility criteria, RLS is open to:
Bear in mind that your business must generate more than 50% of its turnover from trading activity in the UK (i.e. the sale of goods or services), unless you are applying as a registered charity or further education establishment.
The British Business Bank (BBB) has to date accredited more than 70 lenders to the recovery loan scheme (RLS).
Bear in mind that not every accredited lender can offer every type of finance. The British Business Bank is still confirming new accreditations so it’s worth keeping an eye on the BBB current accredited lenders page.
Chancellor Rishi Sunak announced the Recovery Loan Scheme as part of the Spring Budget on 3 March 2021 and announced updates (and a six-month) extension to the RLS scheme on 29 October 2021.
In addition to the Recovery Loan Scheme, which provides debt finance to businesses, the government launched the £375bn Future Fund: Breakthrough in July 2021. This replaced the Future Fund and sees the government investing equity (alongside the private sector) in fast growing R&D intensive companies.
If you think a loan is the best option for your business right now – or if you are interested in other types of lending such as invoice finance, asset finance, or a revolving credit facility, keep looking – don’t give up! If you need help navigating what’s out there, your first step is to register with Swoop so that we can match you with the most relevant funding options. We can also help you with equity and grants – and making savings on your everyday costs such as business bank accounts.
Yes, lenders will carry out a credit check and possibly a fraud check. The types of checks may vary between lenders. If you have been refused credit in the past, you may still be eligible for RLS.
It’s simple and fast to apply online via our simple application, where you answer a few questions about yourself and your business.
Our funding managers are on hand if you have any questions about this scheme or any other areas of funding – contact us here.
We will keep this page updated as and when the government provides any updates.
Written by
Arabella is a former BBC business journalist who began her career as a policy analyst at the Bank of England and Financial Conduct Authority, and more recently worked in the communications and policy team at the British Business Bank.
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