Recovery Loan Scheme UK

What is the Recovery Loan Scheme?

The RLS is a government-backed scheme that provides businesses with access to finance as they invest and grow. It offers facilities of up to £2 million for eligible businesses outside the “Northern Ireland Protocol”, and up to £1 million for eligible businesses inside the “Northern Ireland Protocol”.

Over 50 accredited lenders are offering RLS facilities with terms of up to six years. The government offers lenders a 70% guarantee against the balance of the loan. The Recovery Loan Scheme end date is currently set at 30 June 2024.

The RLS launched on 1 April 2021 to help businesses recover from the impact of the Covid-19 pandemic. It replaced the CBILS, CLBILS and BBLS. Loans of up to £10m were available and the government guarantee stood at 80%. 

In 2022, the RLS was amended, with up to £2m available to SMEs and a 70% government guarantee. Although the scheme ended in June 2022, it was soon relaunched for another two years to help SMEs raise finance.

While the RLS is designed to enable UK business to access finance, Funding Options may be able to find your business a non-RLS loan with better terms. You can also use Funding Options to apply for an RLS loan. 

How does the Recovery Loan Scheme work?

The RLS offers business finance in the following forms: term loans, overdrafts, asset finance and invoice finance. (However, it’s worth noting that not all lenders can offer all finance types). If you take out an RLS facility, you will be 100% liable for the debt. 

When you apply for an RLS loan, you will typically be required to provide two years of financial and management business accounts, as well as bank statements and  cash flow forecasts. The speed from application to drawdown will depend on the individual application.  

How much can I borrow?

Up to £2 million is available to each business group for borrowers outside the scope of the “Northern Ireland Protocol"; up to £1 million is available to each business group inside the scope of the protocol. 

Minimum facility sizes also apply: asset and invoice finance starts at £1,000 per facility, with term loans and overdrafts starting at £25,001. 

What can the funds be used for?

You can use your RLS finance for any legitimate business purpose, such as:

• Cash flow management

• Growing your business

• Investing in an area of your business

• Paying for a one-off expense

• Purchasing equipment 

• Supporting payroll

What is the Recovery Loan Scheme interest rate?

The interest rate and fees on an RLS facility will depend on the lender and your individual circumstance. According to the British Business Bank, the annual effective rate of interest and upfront and other fees can’t exceed 14.99%. 

What term lengths are available?

Your term length will depend on the type of finance facility you choose. 

For term loans and asset finance, the minimum term length is three months and the maximum term length is six years. For overdrafts and invoice finance, the minimum term length is three months and the maximum term length is three years. 

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

Yes, you can apply if your business has other business recovery loans, such as the BBLS, CBILS, CLBILS or RLS facility (however, in some instances it might reduce the amount your business can borrow). 

The lender will carry out their standard credit and fraud checks. 

Will I need a personal guarantee?

Personal guarantees can be taken at the lender’s discretion, as per its usual lending practices. Principal Private Residences can’t be taken as security under the RLS. Also, if the lender can offer finance on normal commercial terms without having to use the scheme, it might do so.

Is my business eligible for an RLS loan?

Recovery loan scheme eligibility depends on a number of factors. Your business must:

• Have a turnover of up to £45m (on a group basis, where part of a group)

• Be carrying out trading activity in the UK and, in the majority of cases, generating more than 50% of income from trading activity

• Have a viable business proposition (the lender may disregard concerns over your business’s short-to-medium term business performance due to the uncertainty and impact of Covid-19)

Your business is not eligible if:

• It is a ‘business in difficulty’, e.g it cannot be in relevant insolvency proceedings

You will also be required to confirm that the RLS facility you’re applying for won’t push your business over the maximum amount of subsidy it can receive. 

As long as you meet the eligibility criteria, you can apply to the RLS if your are a:

• Sole trader

• Corporation

• Limited partnership

• Limited liability partnership

• Co-operative and community benefit society

• Any other legal entity carrying out business activity in the UK

What other options are there if I’m not eligible?

If you’re not eligible for an RLS loan due to bad credit, for example, or if you’d like to explore different options, Funding Options can help. We can match you with non-RLS term loans, overdrafts, asset finance and invoice finance, as well as:

• Bridging loans

• Merchant cash advances 

• Revolving credit facilities

• Overdraft alternatives

• Property finance, including commercial mortgages

Apply for Recovery Loan Scheme

You can use Funding Options to apply for an RLS loan or non-RLS business finance. It’s quick and easy – just start by telling us how much finance you need, what it’s for and how quickly you need it. Start your funding journey with us today.