The government’s Recovery Loan Scheme (RLS), which will now run until 2024, supports UK businesses with lending of up to £2m.
Page written by Arabella McAvoy. Last reviewed on September 4, 2023 8:31 pm
The latest iteration of the Recovery Loan Scheme, details of which were published on 1 August 2022, will run for a further two years until 2024, supporting access to finance for UK businesses as they look to invest and grow.
One change from the previous iteration of the scheme is that (for most borrowers) there is no requirement to confirm they have been affected by Covid-19.
The maximum facility size is still £2 million, at least for borrowers outside the scope of the Northern Ireland Protocol, and £1 million for those in scope of the Northern Ireland Protocol. The British Business Bank will continue to administer the scheme on behalf of the Secretary of State for the Department for Business, Energy, & Industrial Strategy (BEIS).
RLS offers a government guarantee for small business lending; the government underwrites 70 per cent of what the lender could lose if a business defaults.
The UK Government launched RLS in April 2021 with the aim of supporting access to finance for UK businesses recovering from the Covid-19 pandemic. It 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%). And on 20 July 2022 the government announced it would be extended further.
By June 2022 there were more than 80 accredited lenders, offering lending for up to six years.
Businesses who decide the RLS is not for them might want to consider alternative finance options, such as merchant cash advances or invoice finance. There are plenty of alternatives to the Recovery Loan Scheme and Swoop is currently able to offer a 12-month, interest-only loan of up to £250,000 through our platform.
If 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.
A word from Andrea
"With the latest iteration of the Recovery Loan Scheme, businesses are no longer required to prove that they were affected by the Covid-19 pandemic. Because of this, many businesses are looking to the RLS in order to better manage cashflow, investment, and growth. If your business previously utilised CBILS, it is also worth taking advantage of the current RLS scheme."
The Recovery Loan Scheme (RLS) is a government scheme aimed at supporting access to finance for UK businesses.
The previous iteration of RLS, which closed on June 30 2022, aimed to support access to finance for UK businesses recovering from the Covid-19 pandemic.
The current iteration, which opened in August 2022 and will run for two years, removed the need for a business to confirm it has been impacted negatively by Covid-19.
RLS is still designed to be used for business purposes, for example, managing cashflow, investment and growth – and it is open to a broad range of businesses, including to those which had previously taken out a CBILS, CLBILS or BBLS.
RLS replaces 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.
While the Recovery Loan Scheme aims to improve the loan terms available to UK businesses, these terms reflect the protection that the 70% government guarantee offers to lenders. It is worth noting that some businesses might be able to find commercial loans with better terms – or other types of lending – by registering with Swoop.
RLS launched on 6 April 2021 and the new iteration will close in 2024. RLS was initially set to close at the end of 2021 but in Autumn Budget 2021 the Treasury announced it was extending the scheme for six months (until June 30 2022), albeit but with a reduced maximum amount available to businesses and lower government guarantee (see below). In July 2022 the government announced it would extend the scheme for a further two years.
From 1 January 2022, the Recovery Loan Scheme was restricted to small and medium-sized enterprises (SMEs), as announced in the Autumn Budget, 2021.
(When it was initially opened, UK businesses of any size could apply for a loan or overdraft. This was the main difference between the Recovery Loan Scheme (RLS) and the various coronavirus finance support schemes it replaces (BBLS, CBILS, CLBILS. )
Businesses have to meet certain criteria in order to access the scheme. Specifically, a 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, businesses can apply for finance under the Recovery Loan Scheme (RLS) even if they previously borrowed under BBLS, CBILS or CLBILS. Some businesses may be able to borrow more under the RLS than they did previously – though the maximum depends on the lender’s assessment and the scheme requirements. Some may be able to borrow less.
After 1 January 2022 the revamped Recovery Loan Scheme allowed businesses to borrow up to a maximum of £2 million (per business) for all types of borrowing, i.e. term loans, overdrafts, invoice finance and asset finance.
This £2 million maximum remains the same for the new iteration of the Recovery Loan Scheme, until 2024, but only for borrowers outside the scope of the Northern Ireland Protocol. The maximum is now £1 million for those inside the scope of the Northern Ireland Protocol.
Minimum facility sizes vary, starting at £1,000 for asset finance and invoice finance, and £25,001 for term loans and overdrafts.
The annual effective rate of interest and upfront and other fees cannot be more than 14.99%, according to the British Business Bank. 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. Businesses can borrow:
There are two key differences:
The UK Government originally gave lenders an 80% guarantee for applications made under the Recovery Loan Scheme – until the end of 2021. The revamped scheme, announced at the Autumn Budget 2021, saw the government reducing the guarantee to 70% for applications made on or after 1 January 2022. This 70% remains for applications until the scheme closes in 2024.
The guarantee means that if a business defaults on the loan, the lender can recoup 70% of the outstanding value of the loan from the government (or 80% for applications made before 30 December 2021). This guarantee gives lenders confidence to lend to businesses. As the borrower, you are always 100% liable for the debt.
Businesses which successfully apply for Recovery Loan Scheme finance can do so for any legitimate business purpose, for example:
Yes, businesses with total financing needs (including any increase) greater than the minimum facility sizes available under RLS, are able to refinance their BBLS or CBILS loan with a Recovery Loan before 2024, when RLS closes to new applicants.
For businesses which re-finance, applications are treated as new applications for RLS and have to meet the scheme’s eligibility criteria. Businesses are able to either re-finance through existing lenders or apply to a different accredited lender.
Since there is no Business Interruption Payment (BIP) under RLS, any business which refinances a BBLS or CBILS facility (partially or in full) has to forego its remaining BIP entitlement (up to a maximum of 12 months from the outset of the original facility) as part of the re-financing process.
Businesses with a Bounce Back Loan that are able to refinance under RLS should be aware that borrower protections and scheme eligibility (and terms) under these two schemes differed.
The total amount a business can borrow under the RLS, including any additional lending secured via the re-financing of an existing facility, depends on two things: a lender’s affordability assessment and the requirements of the scheme.
As you’d expect, businesses with bad credit have fewer Recovery Loan options available to them and the interest rates they are able to secure are typically higher.
That said, some businesses which had been refused credit in the past have been able to apply for the Recovery Loan Scheme. Lenders review each application on its own merits, i.e. on a case-by-case basis.
If RLS is not an option for your business, you might consider exploring business loan options and indeed other finance options available to your business. Register with Swoop to understand your options.
Yes, sole traders were able to apply for the Recovery Loan Scheme.
In fact, as long as a business satisfies the other eligibility criteria, RLS is open to:
That said, businesses have to be generating more than 50% of their turnover from trading activity in the UK (i.e. the sale of goods or services), unless they were applying as a registered charity or further education establishment.
By the time the Recovery Loan Scheme ended on 30 June 2022, the British Business Bank had accredited more than 80 lenders for the previous iteration of RLS. However, there are now just 8 accredited lenders under the new iteration. This list is maintained by the British Business Bank and will undoubtedly change between now and the closing date in 2024. Lenders currently accredited under the new iteration of RLS include:
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. The government also announced a two-year extension on 20 July 2022.
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.
Our funding managers are on hand if you have any questions about funding options – contact us here.
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 a business recovery loan.
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.
It’s simple and fast to apply online via our simple application, where you answer a few questions about yourself and your business.
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.
To read our editorial policy, please click here.
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