Support Articles

Recovery Loan Scheme (RLS) – what is it and how does it work?

19 May 2021

Nobody can deny that the last twelve months have been one of the most challenging periods faced by businesses. The financial support that is available for Covid-19 recovery and how you can access that support has changed a lot. It’s understandable if you’ve not been able to keep up! 

Most recently, the Chancellor has announced the new Recovery Loan Scheme. The Recovery Loan Scheme (RLS) provides financial support to businesses across the UK as they recover and grow following the coronavirus pandemic and replaces the previous schemes that have been available such as the Bounce Back Loan, Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme (BBLS, CBILS, CLBILS). 

UPDATE: Scheme extended until 30th June 2022

Below we will look at some of the key features of RLS and how it differs to previous schemes.

Key features until 31st December 2021

The key things that you need to know about the Recovery Loan Scheme is that:

  1. it is a partnership between the Government and a lender to facilitate lending to eligible UK businesses
  2. the maximum lending under RLS, including any previous scheme facilities, is the lesser value of £10m or the borrower’s specific limit
  3. it can be used to facilitate new lending and, to a limited extent, the refinance of existing debt
  4. the scheme is open to SMEs and large enterprises, and (unlike CBILS for example) there is no minimum or maximum turnover restrictions
  5. unlike the previous emergency lending support schemes, applicants to the RLS can have live facilities under those schemes (BBLS, CBILS, CLBILS) at the same time as an RLS facility (maximum limits apply)

What can you apply for?

  • Term loans or overdrafts of between £25,001 and £10million per business.
  • Invoice or asset finance of between £1,000 and £10million per business.

No personal guarantees will be taken on facilities up to £250,000. 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. A borrower’s principal private residence cannot be taken as security. 

From 1st January 2022

Following the extension of the RLS to 30th June 2022, it is important to note the following changes that will be applicable to any applications from 1st January:

  • A maximum of £2million will be able to be borrowed per business, a reduction from up to £10million per business
  • The government guarantee of funds being borrowed will reduce from 80% to 70%

Who’s eligible?

You can apply for the RLS if your business:

  • is trading in the UK

You will need to show that your business:

  • would be viable were it not for the pandemic 
  • has been impacted by Covid-19
  • is carrying out trading activity in the UK
  • is not in collective insolvency proceedings (unless your business is in scope of the Northern Ireland Protocol in which case different eligibility rules may apply)

What is the term length?

The maximum length of the facility depends on the type of finance you apply for and will be:

  • up to 3 years for overdrafts and invoice finance facilities
  • up to 6 years for loans and asset finance facilities

A view from the experts…

“The Recovery Loan Scheme (RLS) scheme, which came into effect on the 6th April 2021, replaced the Coronavirus Business Interruption Loan Scheme (CBILS) and associated schemes which ceased on the 31st March 2021.

Following the success of CBILS and with economic uncertainty still apparent, RLS is intended to stimulate economic recovery through growth and continued investment. And whilst it is provided to support growth, the RLS is provided at the discretion of the lender and lending criteria can apply.

In my opinion RLS is a positive scheme and one that will support many UK businesses that may not have otherwise been able to access critical funding.”

- David Catling, Executive Director.

How do I apply?

The Recovery Loan Scheme is now open for applications. The programme has been extended until 30th June 2022.

Email or call us now to discuss the scheme further.
0114 442 8008