The Recovery Loan Scheme is being launched to replace the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS). Each of these facilities closed on 31 March 2021, as the new Recovery Loan Scheme opened on 6 April 2021. It is currently scheduled to run until 31 December 2021 (although this is subject to review).

The Recovery Loan Scheme enables businesses of any size to continue to access loans and other kinds of finance up to £10m per business after the existing COVID-19 loan schemes close.  To provide confidence to the financial services businesses providing these facilities, the government will guarantee 80% of the finance to the lender. 

The scheme will provide support as businesses recover and grow following the disruption of the COVID-19 pandemic and the end of the Brexit transition period.

The money can be used for any legitimate business purpose, including managing cashflow, growth and investment.

What funding is available? New

  • The scheme offers a range of products eg term loans, overdrafts, asset finance and invoice finance facilities.
  • Term loans and asset finance facilities are available for up to 6 years and overdrafts and invoice finance facilities are available for up to 3 years.
  • Asset finance and invoice finance facilities are available for amounts between £1,000 and £10 million per business (up to £30 million per group).
  • Term loans and overdraft facilities are available under the scheme for amounts between £25,001 and £10 million per business (up to £30 million per group).
  • Business will need to pay interest payments along with any fees associated with the facility.
  • The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%.
  • 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.
  • Recovery Loan Scheme-backed facilities are provided at the discretion of the lender.
  • If you have used CBILS, CLBILS or BBLS facility you can still access the new scheme.  However, in certain circumstances, these pre-existing facilities could limit the amount you may borrow under RLS.

The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility, however its important to know that the borrower always remains 100% liable for the debt.

Who is eligible: New

  • You must be trading in the UK
  • Show your business is viable or would be viable were it not for the pandemic; has been impacted by the coronavirus pandemic and is not in collective insolvency proceedings.
  • There are no turnover restrictions on businesses applying under the scheme.
  • All applications will be subject to credit and fraud checks for all applicants. Lenders may overlook concerns over short-to-medium term performance owing to the pandemic and this may vary between lenders.

Businesses who are not eligible include:

  • banks, building societies, insurers and reinsurers (but not insurance brokers); public-sector bodies and state-funded primary and secondary schools.

How to apply New

The Recovery Loan Scheme will initially be available through a number of lenders accredited by the British Business Bank (frequently updated).  Businesses are advised to approach their own finance provider initially - ideally via the lender's website. They may also consider approaching other lenders if they are unable to access the finance they need.

Take Action Now

To find out more about how Dains can support your business with an application for a Coronavirus Recovery Loan Scheme, please call 0845 555 8844 or simply complete our enquiry form.  Don’t wait, take advice now, we are here to help you.