Recovery Loan Scheme

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

Arabella McAvoy

Updated: September 8, 2021 at 9:17 am

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?

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?

What are the interest rates?

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?

How do I apply?

When does the Recovery Loan Scheme start and end?

The Recovery Loan Scheme (RLS) 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.

What are the interest rates?

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.

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, for example:

  • Managing cash flow
  • Buying equipment
  • Meeting a one-off cost
  • Helping with payroll
  • Investing in, for example, marketing
  • Growing your business.

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

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.

  • Adam Bank
  • Allied Irish Bank
  • Aldermore
  • Arbuthnot Latham
  • ART Business Loans
  • Assetz Capital
  • Atom Bank
  • Bank of Scotland
  • Barclays
  • BCRS Business Loans
  • BLG
  • Business Enterprise Fund
  • Close Brothers
  • Clydesdale Bank
  • Compass Business Finance
  • Conister
  • Coutts
  • Cynergy Bank
  • Danske Bank
  • DSL Business Finance Limited
  • Ebury
  • Enterprise Answers
  • Finance for Enterprise
  • First Enterprise
  • The FSE Group
  • Funding Circle
  • FW Capital
  • Growth Company Business Finance
  • Genesis
  • HTB
  • Hitachi Capital UK
  • HSBC UK
  • IGF
  • InterBay
  • Investec Bank
  • Let’s Do Business
  • Leumi ABL
  • Leumi UK
  • Lloyds Bank
  • Maven
  • Mercia
  • Metro Bank
  • NatWest Bank
  • NEL
  • Newable
  • Nucleus
  • OakNorth Bank
  • Paragon
  • Santander
  • Scania Financial Services
  • Secure Trust Bank
  • Shawbrook Bank
  • Shire Leasing
  • Simply
  • Skipton Business Finance
  • SWIG Finance
  • Starling Bank
  • RBS
  • Thincats
  • Time Finance
  • Tower Leasing
  • Triodos Bank
  • 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. 

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.

Tips for applying for the Recovery Loan Scheme

  1. Make sure you have a clear idea about of the purpose of the loan and include this in your business plan.
  2. As well as a business plan, you’ll need to get other paperwork together before you make your application. For example, you’ll need to prepare management accounts, financial accounts and information about any business assets. Swoop (and lenders) can use this paperwork to make sure your loan is affordable and viable.
  3. While you can apply directly to a lender, we’d suggest making your application via Swoop as our Funding Managers can identify the right type of borrowing and identify the most relevant lender(s) for your business. We’ll save you from having to contact multiple lenders – so we’ll help you to minimise the number of credit checks.
  4. Unlike earlier Covid-19 loans the British Business Bank is not paying the first year’s interest and fees. Make sure you’ve factored these costs into your forecasts.

Mistakes to avoid when applying

  1. Term loans and asset finance facilities are for six years; overdrafts and invoice financing facilities are for three years. You’ll run into trouble if you don’t make sure the financing you’re applying for matches your cash flow needs.
  2. Don’t borrow more than you can afford. Loans are available from £1,000 to £10m and there’s no turnover test under the Recovery Loan Scheme. However, you need to know how you’ll repay your loan, especially if you give a personal guarantee (though the lender can’t take security on your principal private residence). So… keep your cash flow forecasts up to date and make sure they are realistic. It’s always a good idea to stress test your forecasts so that you can see how easily you can afford to repay the loan if your trading results aren’t as good as you hoped.
  3. There are over 50 potential lenders and more are joining the scheme every week. They often have more than one type of finance available and some lenders have restrictions on whom they’ll lend to. You’ll want to be certain that you’re applying for the right financing from the right lender or you’ll waste your valuable time. Here at Swoop we’re familiar with all the products on the market so we can save you time that you can instead spend running your business.
    Don’t get stung by high interest rates! For example, if your loan application is declined by one lender and you’re offered a loan by another lender, the interest rates could be much higher. This is another reason to apply through Swoop rather than taking the direct approach and applying to multiple lenders.

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.

How do I apply?

It’s simple and fast to apply online via our simple application, where you answer a few questions about yourself and your business.

Apply now

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 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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