Recovery Loan Scheme applications have now closed

The government’s Recovery Loan Scheme (RLS), which closed to new applicants on 30 June 2022, supported UK businesses as they recovered from the Covid-19 pandemic, with lending of up to £2m.

Arabella McAvoy

Arabella McAvoy

Updated: July 3, 2022 at 12:07 pm

Rest assured there is life after RLS and businesses 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 (RLS) and Swoop is currently able to offer a 12-month, interest-only loan of up to £250,000 through our platform.

The UK government launched the Recovery Loan Scheme (RLS) in April 2021 with the aim of supporting access to finance for UK businesses recovering 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.

By June 2022 there were more than 80 accredited lenders, offering lending for up to six years.

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.

What is the Recovery Loan Scheme (RLS)?

When did the Recovery Loan Scheme start and end?

Which businesses were eligible?

Could businesses apply for Recovery Loan Scheme if they previously had a Bounce Back Loan or borrowed under CBILS or CLBILS?

How much could each business borrow?

What were the interest rates?

When do businesses need to pay the money back?

How does the Recovery Loan Scheme differ from the schemes it replaced?

What is the government guarantee?

What can the funds be used for?

Could a business refinance a BBLS or CBILS loan, in part or in full?

Could businesses with bad credit get a Recovery Loan?

Could sole traders access the Recovery Loan Scheme?

Which lenders took 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?

How do I apply?

What is the Recovery Loan Scheme (RLS)?

The Recovery Loan Scheme (RLS) is a government scheme aimed at supporting access to finance for UK businesses amidst the Covid-19 pandemic.

RLS closed on June 30 2022. It was designed to be used for business purposes, for example, managing cashflow, investment and growth. It was open to a broad range of businesses, including to those which had previously taken out a CBILS, CLBILS or BBLS.

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.

The Recovery Loan Scheme aimed to improve the loan terms available to UK businesses. These terms reflected the protection that the 70% government guarantee offered to lenders. That said, some businesses were able to find commercial loans with better terms – or other types of lending – by registering with Swoop.

When did the Recovery Loan Scheme start and end?

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 30 2022), albeit but with a reduced maximum amount available to businesses and lower government guarantee (see below).

Which businesses were eligible?

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 replaced (BBLS, CBILS, CLBILS). With the RLS there were no restrictions on turnover – at least until 1 January 2022, when the scheme was restricted to small and medium-sized enterprises (SMEs), as announced in the Autumn Budget, 2021.

Businesses did, however, have to meet certain criteria in order to access the scheme. Specifically, a business had to:

  • 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 were required to undertake credit and fraud checks for all applicants to the Recovery Loan Scheme – the checks and approach varied according to the lender.
  • Lenders did not take personal guarantees on facilities up to £250,000, and lenders could not take a borrower’s principal private residence as security.
  • If a lender was able to offer finance on normal commercial terms without the need to make use of the scheme, they may have done this.

Could businesses apply for the Recovery Loan Scheme if they previously had a Bounce Back Loan or borrowed under CBILS or CLBILS?

Yes, businesses could apply for finance under the Recovery Loan Scheme (RLS) even if they previously borrowed under BBLS, CBILS or CLBILS. Some businesses were able to borrow more under the RLS than they had previously – though the maximum depended on the lender’s assessment and the scheme requirements.

How much could each business borrow?

The amount a business could borrow under the Recovery Loan Scheme depended on which type of finance they chose. After 1 January 2022 the revamped scheme allowed businesses 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.

What were the interest rates?

Interest rates for the Recovery Loan Scheme were 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 depended on the lender and on your business circumstances.

When do businesses need to pay the money back?

Term lengths depend on the type of finance (product) you choose. Businesses will have borrowed:

  • up to six years for term loans and asset finance facilities
  • up to three years for overdrafts and invoice finance facilities.

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

There are two key differences:

  • Interest and fees – you had to pay interest (and fees) from day one under the Recovery Loan Scheme because the British Business Bank no longer paid your interest and fees for the first 12 months.
  • Loan size – there was no turnover restriction under the Recovery Loan Scheme but the maximum loan amount was capped at £10m for applications made in 2021, and £2m for applications made from January 1 2022 to 30 June 2022, when the scheme closed.

What is the government guarantee?

The UK Government 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, until the scheme closed on 30 June 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.

What can the funds be used for?

Businesses which successfully applied for Recovery Loan Scheme finance could have done so for any legitimate business purpose, for example:

  • managing cash flow
  • buying equipment
  • meeting a one-off cost
  • helping with payroll
  • investing in, for example, marketing
  • growing the business.

Could a business refinance a BBLS or CBILS loan, in part or in full?

Yes, businesses with total financing needs (including any increase) greater than the minimum facility sizes available under RLS, were able to refinance their BBLS or CBILS loan with a Recovery Loan before 30 June 2022, when RLS closed to new applicants.

For businesses which did re-finance, applications were treated as new applications for RLS and had to meet the scheme’s eligibility criteria. Businesses were able to either re-finance through existing lenders or apply to a different accredited lender.

Since there was no Business Interruption Payment (BIP) under RLS, any business which refinanced a BBLS or CBILS facility (partially or in full) had 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 were able to refinance under RLS should have been aware that borrower protections and scheme eligibility (and terms) under these two schemes differed.

The total amount a business could borrow under the RLS, including any additional lending secured via the re-financing of an existing facility, depended on two things: a lender’s affordability assessment and the requirements of the scheme.

Read our in-depth CBILS refinancing guide here

Could businesses with bad credit get a Recovery Loan?

As you’d expect, businesses with bad credit had fewer Recovery Loan options available to them and the interest rates they were able to secure were typically higher.

That said, some businesses which had been refused credit in the past were able to apply for the Recovery Loan Scheme. Lenders reviewed each application on their own merits, i.e. on a case-by-case basis.

Now that RLS is over, you should explore other business loan options and indeed other finance options available to your business. Register with Swoop to understand your options.

Could sole traders access the Recovery Loan Scheme?

Yes, sole traders were able to apply for the Recovery Loan Scheme.

In fact, as long as a business satisfied the other eligibility criteria, RLS was open to:

  • sole traders
  • corporations
  • limited partnerships
  • limited liability partnerships
  • co-operatives and community benefit societies
  • any other legal entity carrying out business activity in the UK with business activity operating through a business account.

That said, businesses had 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.

Which lenders took part in the new Recovery Loan Scheme?

By the time the Recovery Loan Scheme ended on 30 June 2022, the British Business Bank (BBB) had accredited more than 80 lenders to the recovery loan scheme (RLS). See the list below.

Bear in mind that not every accredited lender offered every type of finance and some lenders stopped accepting applications ahead of the 30 June 2022 deadline. The British Business Bank kept an up-to-date record on the BBB current accredited lenders page.

  • ABN Amro
  • Adam Bank
  • Allied Irish Bank
  • Aldermore
  • Allica Bank
  • Arbuthnot Latham
  • Arkel Finance Limited
  • ART Business Loans
  • Assetz Capital
  • Atom Bank
  • Bank of Scotland
  • Barclays
  • BCRS Business Loans
  • The Big Isssue
  • BLG
  • Boost & Co
  • Business Enterprise Fund
  • Close Brothers
  • Clydesdale Bank
  • Compass Business Finance
  • Conister
  • Coutts
  • CWRT
  • Cynergy Bank
  • Danske Bank
  • DSL Business Finance Limited
  • Ebury
  • Enterprise Answers
  • Fiduciam
  • Finance for Enterprise
  • First Enterprise
  • The FSE Group
  • Funding Circle
  • FW Capital
  • Growth Company Business Finance
  • Genesis
  • HTB
  • Heydock Finance
  • HSBC UK
  • IGF
  • InterBay
  • Investec Bank
  • Iwoca
  • Kingsway Finance
  • Lending Crowd
  • Let’s Do Business
  • Leumi ABL
  • Leumi UK
  • Lloyds Bank
  • Market Finance
  • Maven
  • Merchant Money
  • Mercia
  • Metro Bank
  • NatWest Bank
  • NEL
  • Newable
  • Novuna
  • Nucleus
  • OakNorth Bank
  • Paragon
  • RM Funds
  • Robert Owen Community Banking
  • Santander
  • Scania Financial Services
  • Secure Trust Bank
  • Shawbrook Bank
  • Shire Leasing
  • Simply
  • Skipton Business Finance
  • Social Investment Business
  • SWIG Finance
  • Starling Bank
  • RBS
  • Thincats
  • Time Finance
  • Tower Leasing
  • Triodos Bank
  • Triple Point
  • UKSE
  • Ulster Bank
  • United Trust Bank
  • Whiterock Finance
  • Yorkshire Bank

When was the scheme announced?

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.

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 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.

What do I do if I’ve been rejected for the Recovery Loan Scheme?

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 now RLS applications are no longer being accepted – contact us here.

We will keep this page updated as and when the government provides any updates.

Arabella McAvoy

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.

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