The government’s Recovery Loan Scheme (RLS) aims to support UK businesses of any size as they recover from the Covid-19 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.
The Recovery Loan Scheme (RLS) is backed by the government to encourage lenders to give SMEs the finance they need.
The number of options for businesses is growing almost daily as lenders become accredited, leading to a competitive choice for SMEs to take advantage of: for example, Swoop can now offer a 12 months interest-only loan of up to £250k available through our portal.
If you are looking to refinance loans taken out during the pandemic, need extra cash to realise your growth plans or have some urgent equipment upgrading to do, now could be the time to check out which of the great deals you qualify for.
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.
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?
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?
The Recovery Loan Scheme (RLS) launched on 6 April 2021 and closes on 31 December 2021, “subject to review”.
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:
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. There are two main types of 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 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.
If your application is successful you can use your Recovery Loan Scheme finance for any legitimate business purpose, for example:
The British Business Bank (BBB) has to date accredited more than 50 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 page.
Chancellor Rishi Sunak announced the Recovery Loan Scheme as part of the Spring Budget on 3 March 2021.
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.
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.
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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