Recovery Loan Scheme

The government’s new Recovery Loan Scheme aims to support UK businesses of any size as they recover from the pandemic, with loans between £25,000 and £10m

The UK government’s new Recovery Loan Scheme (RLS) replaced the previous Covid-19 debt schemes – 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.

When does the Recovery Loan Scheme start and end?

Is my business eligible?

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

How much can I borrow?

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?

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?

When does the Recovery Loan Scheme start and end?

The Recovery Loan Scheme launched on 6 April 2021 and closes on 31 December 2021, “subject to review”.

Is my business eligible?

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.

Your business must however meet certain criteria in order to access the scheme. Specifically, your business must:

Be a UK trading company
Be viable (or would be viable were it not for the pandemic)
Have been impacted by the coronavirus pandemic
Not be in collective insolvency proceedings

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:

Lenders are required to undertake credit and fraud checks for all applicants to the Recovery Loan Scheme – the checks and approach may vary between lenders.
Lenders will not take personal guarantees on facilities up to £250,000, and lenders cannot take a borrower’s principal private residence as security
If a lender can offer finance on normal commercial terms without the need to make use of the scheme, they may do so

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

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.

How much can I borrow?

The amount your business can borrow under the Recovery Loan Scheme depends which type of finance you choose. There are two main types of finance.

You can borrow from £25,001 to £10m (per business) for term loans and overdrafts
You can borrow from £1,000 to £10m (per business) for invoice finance and asset finance.

When do I need to pay the money back?

Term lengths depend on the type of finance (product) you choose.

You can borrow for up to six years for term loans and asset finance facilities
You can borrow for up to three years for overdrafts and invoice finance facilities.

How does Recovery Loan Scheme differ from the schemes it replaces (i.e. BBLS, CBILS and CLBILS)?

There are two key differences:

Interest and fees – you’ll have to pay interest (and fees) from day one under the Recovery Loan Scheme because the British Business Bank will no longer pay your interest and fees for the first 12 months.
Loan size – there is no turnover restriction under the Recovery Loan Scheme but the maximum loan amount is now capped at £10m.

What is the government guarantee?

The Recovery Loan Scheme operates in a similar way to the existing support measures, with the government giving lenders an 80% guarantee. This means that if a business defaults on the loan, the lender can recoup 80% of the outstanding value of the loan from the government. This guarantee gives lenders confidence to lend to businesses. As the borrower, you are always 100% liable for the debt.

What can the funds be used for?

If your application is successful you can use your Recovery Loan Scheme finance for any legitimate business purpose, including managing cash flow, investment and growth.

Which lenders are taking part in the new Recovery Loan Scheme?

While several lenders have stated publicly that they plan to take part, the British Business Bank has yet to confirm which lenders will be involved.

We understand that the British Business Bank is inviting all CBILS/CLBILS lenders to participate in an accelerated accreditation process as long as they meet the relevant criteria. We’ll update keep you updated.

When was the scheme announced?

Chancellor Rishi Sunak announced the Recovery Loan Scheme as part of the Spring Budget on 3 March 2021.

What other government-backed finance schemes are available to businesses post-Covid?

In addition to the Recovery Loan Scheme, which provides debt finance to businesses, the government announced a second scheme as part of the Spring Budget in March. Future Fund: Breakthrough replaces the Future Fund and will see the government investing equity (alongside the private sector) in fast growing innovative firms. It launches in early summer of 2021.

We will keep this page updated as and when we have more information from the government.

Written by

Arabella McAvoy

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.