Recovery Loan Scheme
Government-backed funding to help businesses affected by COVID-19
Recovery Loan Scheme
Government-backed funding to help businesses affected by COVID-19
Loan Amount
£25k-£10m
Loan Term
Up to 6 years
Time to Funds
As Little as 7 days
Interest Rate
Estimated between 3-15% p.a.
Recovery Loan Scheme
- Borrow in addition to CBILS or other facilities
- Fund growth, take opportunities, fund acquisitions
- No personal guarantees under £250k
Recovery Loan Scheme: What You Need to Know
The Recovery Loan Scheme (RLS) is a new government-backed loan scheme helping businesses that need it. It aims to support businesses like yours affected by Covid-19, providing funding to recover and grow.
The Scheme could suit you if you can afford to take out additional debt finance and are looking to grow. You could use it for any legitimate business purpose, including managing cashflow, investment and growth. However, unlike the Bounce Back and CBILS scheme that it replaces, you’ll pay all of the fees and interest costs.
Key features of the Recovery Loan Scheme
The Recovery Loan Scheme is a Government guarantee given to lenders to encourage them to keep lending to businesses like yours. The scheme guarantees a wide range of products, covering business loans, overdrafts, asset finance and invoice finance facilities.
Firstly, you can borrow up to a maximum of £10 million, available on repayment terms up to six years. However, your application will be assessed by lenders according to their own normal criteria. Secondly, you can borrow as little as £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. And thirdly, you’ll also be required to meet the costs of interest payments and any fees associated with the facility from the outset.
You’ll go through all the usual lender checks. These will include standard credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants. When making their assessment lenders can overlook concerns over short-term performance owing to the pandemic.
Your business remains 100% liable for repayment of the facility. If you can’t repay, as a last resort, the government would repay the lender, up to 80% of the outstanding balance.
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Recovery Loan Scheme eligibility
The scheme is open to most businesses who meet the eligibility criteria, regardless of turnover. If you have an existing facility under either the Bounce Back Loan Scheme or CBILS, you can still access the new scheme. Keep in mind that you’ll need to be eligible and meet a lender’s assessment of affordability.
Am I eligible for the Recovery Loan Scheme?
To be eligible for a facility under the Recovery Loan Scheme, you must meet certain eligibility criteria.
– You can self-certify that you’ve been impacted by Covid-19.
– You are a UK-based in your business activity and generate more than 50% of turnover from trading activity.
– You’re engaged in trading activity in the UK.
– You have a borrowing proposal which would be considered viable by the lender.
– You’re not be in collective insolvency proceedings.
In addition to this:
– You cannot be a bank/ building society; an insurer or reinsurer (can be an insurance broker). You can’t be a public-sector body; a state funded primary or secondary school. Lastly, you can’t be an individual other than a sole trader or a partner acting on behalf of a partnership.
– If a lender can offer finance on normal commercial terms without the need to make use of the scheme, they may do so.
Do I need to give a personal guarantee?
For facilities of £250,000 or less, personal guarantees cannot be taken by lenders in relation to the facility.
In contrast, for facilities above £250,000, you may still need to give a personal guarantee, at a lender’s discretion. However, no recovery action can be taken over your home. Furthermore, recoveries are capped at a maximum of 20% of the outstanding balance of the facility.
Can I have CBILS as well as Recovery Loan Scheme?
Yes, you can access the scheme if you already have a CBILS loan. Keep in mind you must meet the eligibility criteria and pass any lender affordability checks.
Can I have Bounce Back as well as Recovery Loan Scheme?
Yes, you can access the scheme if you already have a Bounce Back loan. Keep in mind you must meet the eligibility criteria and pass any lender affordability checks.
Can a business use the Recovery Loan Scheme to refinance debt?
Yes, you can refinance bounce back loans, CBILS loans or conventional debt under the Recovery Loan Scheme. Any re-financing will be considered as a new application for the scheme, so will be subject to meeting the Scheme eligibility criteria. Re-financing can be sought with your existing lender or a different accredited lender. Also, as you’d expect, you’ll need to meet the lender’s affordability criteria.
There is no Business Interruption Payment (BIP) under Recovery Loan Scheme. Therefore, if you refinance a bounce back or CBILS loan you’ll lose that benefit.
Existing Bounce Back borrowers are able to refinance under the Recovery Loan Scheme. However, borrower protections and scheme eligibility/ terms under these schemes differ. You should first discuss with their lender.
Further Information
For futher information read the the detailed FAQs on the British Business Bank’s website.
Need help applying for the Recovery Loan Scheme?
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