The Recovery Loan Scheme (RLS) launched on 6 April 2021
and supports access to finance for UK businesses as they recover
and grow following the Covid-19 pandemic.
RLS aims to help businesses affected by Covid-19 and can be used
for business purposes, including, managing cashflow, investment and
growth. It is designed to support businesses that can afford to take out
additional finance for these purposes. All businesses may be eligible for the Recovery Loan Scheme, including businesses who have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme.
A key aim of the Recovery Loan Scheme is to improve the terms on
offer to businesses, but if a lender can offer a business the choice of a
commercial loan on better terms, without requiring the guarantee
provided by the RLS, they should do so.
The Scheme will run until 31 December 2021, subject to review.
Scheme features include:
- Up to £10m facility per business: The maximum amount of a
facility provided under the scheme is £10m per business (maximum
£30m per group). Minimum facility sizes vary, starting at £1,000 for
asset and invoice finance, and £25,001 for term loans and
- Term length: Term loans and asset finance facilities are
available from three months, for up to six years, with overdrafts and
invoice finance available from three months, for up to three years.
- Interest and fees to be paid by the borrower from the
outset: Businesses are required to meet the costs of interest
payments and any fees associated with the RLS facility.
- Access to multiple Covid-19 schemes: Businesses that have
taken out a CBILS, CLBILS or BBLS facility are able to access the
new scheme although the amount they have borrowed under a
previous scheme may in certain circumstances limit the amount
they may borrow under RLS.
- Personal Guarantees: Personal guarantees are not permitted for
facilities of £250,000 or less. Above £250,000 the maximum
amount that can be covered under RLS is capped at a maximum of
20% of the outstanding balance of the RLS facility after the
proceeds of business assets have been applied. No personal
guarantees can be held over Principal Private Residences.
Guarantee to the Lender: The scheme provides the lender with a
government-backed guarantee against the outstanding balance of the
facility. The borrower always remains 100% liable for the debt.
- Covid-19 impact: The borrower must confirm to the lender that it
has been impacted by Covid-19.
- UK-based: The borrower must be carrying out trading activity in the
- Viability test: The lender will consider that the borrower has a
viable business proposition but may disregard any concerns over its
short-to-medium term business performance due to the uncertainty
and impact of Covid-19.
- Credit and fraud checks for all applicants: Lenders will be
required to undertake credit and fraud checks for all applicants. The
checks and approach may vary between lenders.
- Turnover limit: There is no turnover restriction for businesses
accessing the scheme.
Please note: The following are not eligible under RLS:
- Banks, Building Societies, Insurers and Reinsurers (excluding
- Public sector bodies.
- State funded primary and secondary schools.