Recovery Loan Scheme (RLS)

The Government’s new business Recovery Loan Scheme (RLS) has been extended until 2024 and provides funding from £1,000 up to £2 million. Here’s everything you need to know.

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Written by Simon Moorcroft | Reviewed by Richard Wilcock | Updated: December 05, 2023

This document was last updated on 24th August 2022. We will be updating this page as new information about the scheme emerges.

What is the Recovery Loan Scheme?

The Recovery Loan Scheme (RLS) launched in April 2021 and supported UK businesses in the aftermath of the pandemic. It replaced all other covid-related schemes, including the Bounce Back Loan Scheme (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS).

The Recovery Loan Scheme has now been extended and will run for another 2 years from 1 August 2022 until 30 June 2024.

If you’ve already borrowed money through other Schemes like the ones mentioned above, you can still apply for finance through the new Recovery Loan Scheme, but this might limit the amount you can borrow under the new Scheme.

There is no limit to what you can do with the funding, as long as it’s business-related. Use the Scheme to pay staff wages, re-balance your cash flow, or invest in new markets.

How does the Recovery Loan Scheme work?

The Recovery Loan Scheme aims to improve the terms on offer to your business. That means, if the lender you choose can offer you a different loan product with better terms, they should as they do not require the Government-backed guarantee. The Government-backed guarantee is put against the outstanding balance of the finance and is solely to encourage lenders to lend — they will only guarantee 70% of the Recovery Loan.

Only lenders accredited by the British Business Bank will be able to offer the Recovery Loan Scheme. You can check the lender eligibility list on the British Business Bank accredited lender page.

And remember - as the borrower, you are 100% liable for debt repayment .

How the Recovery Loan Scheme (RLS) works

What type of finance is available with the Recovery Loan Scheme?

The types of funding available to your business through the Recovery Loan Scheme (RLS) are as follows:

  • Term Loans - from £25,001 up to £2 million per business
  • Overdraft - from £25,001 up to £2 million per business
  • Invoice Finance - from £1,000 up to £2 million per business
  • Asset Finance - from £1,000 up to £2 million per business
Remember: Not all accredited lenders will be able to provide all types of finance. Also, the amount you can borrow is dependent on the provider.

Does my business qualify for the Recovery Loan Scheme?

You might be asking yourself “am I eligible for the Recovery Loan Scheme?” We’ve compiled brief eligibility criteria below to help you understand if your business is eligible to apply.

You will be eligible if your business:

  • Available to businesses with a turnover of up to £45m
  • UK based business and must be generating more than 50% of its income from trading activity
  • Has a viable business proposition – your lender may disregard (at its discretion) any concerns over short-term to medium-term business performance due to the uncertainty and impact of Covid-19

You will not be eligible if your business:

  • Is in ‘collective insolvency proceedings’
  • Is a Bank, building society, insurer or reinsurer (excluding insurance brokers)
  • Is a public-sector body
  • Is a state-funded primary or secondary school

If your business has been affected by coronavirus and you’re after some additional funding to help your business stay afloat, but you don’t meet the eligibility criteria above, don’t worry. We can help you find an alternative financial solution, it's what we do.

Read more about our alternative financial products.

Can I apply for a Recovery Loan if I have previously received other government grants and loans (CBILS/CLBILS/BBLS)?

Yes, you can. UK businesses with CBILS, CLBILS, and BBLS facilities can still apply and access the Recovery Loan Scheme. Of course, you’ll have to meet the criteria outlined above, although please note, the above eligibility criteria is not an exhaustive list.

Additional to the eligibility criteria, your lender will still want to ensure you can afford the loan repayments, so their individual criteria will also apply. Remember, if you’ve already received funding through other coronavirus schemes, you might only be able to secure limited funding.

How do I apply for the Recovery Loan Scheme?

Applying for the Recovery Loan Scheme is straightforward. Simply complete our short application form to start the process. To check your eligibility, our accredited lenders will need:

  • Management accounts
  • Business plan
  • Historic accounts
  • Details of assets
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Will I need to provide a personal guarantee to get a Recovery Loan?

Personal guarantees will be taken at lenders discretion, in line with their normal commercial lending practices. If a personal guarantee is taken, the following will apply:

  • The maximum amount that can be covered under the Recovery Loan Scheme is capped at a maximum of 20% of the outstanding balance after the proceeds of business assets have been applied.
  • No personal guarantees can be held over Principal Private Residences.
To find out more about providing a personal guarantee, you can read our guide: What is a personal guarantee?

Will I have to pass a credit check to get a Recovery Loan?

Just like with every financial application, lenders will perform a credit check. And, as you can imagine, lenders have to carry out fraud checks, too — these loans are for businesses that have been affected by the pandemic and no one else. They need to ensure the loans are going to those who need them.

If you’ve got bad credit and are exploring all your financial options, check out our business loans for bad credit guide.

What are the interest rates for the Recovery Loan, and when do I repay?

Although the government paid the interest for the first 12 months with other coronavirus business support schemes, this is not the case with the Recovery Loan Scheme. You will need to pay interest and fees (if applicable) from the beginning. Fees and interest rates are capped at 14.99% per annum.

Unlike previous covid schemes, there is no delay for loan repayment. Your first repayment will depend on the lender’s policies, it might be a month after taking out the loan, or some lenders could offer a Capital Repayment Holiday (CRH). This is something you’ll have to ask your chosen lender.

Important: It’s worth noting that you will remain 100% liable for the debt; please take this into account before applying.

Can I qualify for the Recovery Loan Scheme if my business has bad credit?

If you have bad credit, this may restrict the finance options available to you and also the interest rate you can secure. As we learn more about how this affects your application, we’ll update this section.

If you’ve been refused credit in the past, you might still be able to apply for the Scheme. Each lender will review each application on a case-by-case basis, so it’s worth applying just in case.

Make sure you explore all the financial options available to your business, check out our business loans for bad credit.

Is the Recovery Loan Scheme available for sole traders?

Yes, if you’re a sole trader you can apply for the Recovery Loan Scheme. You can also apply for the Scheme if you’re a limited partnership, LLP, co-operatives and community benefit societies and corporations.

Important: Please note that your UK business must generate more than 50% of its turnover from trading activity in the UK.

Alternatively, you can apply for a sole trader loan.

What term can I borrow over?

Terms depend on the product type you choose. For example, term loans and asset finance facilities are available for up to six years, but overdrafts and invoice finance available for up to three years. That’s why it’s important to research your financial options carefully, if term length is important to you, you should consider a loan product that enables you to pay over a longer-term.

Is the Recovery Loan Scheme available for startup companies?

Yes, the Recovery Loan Scheme is available for start-ups, but only at the discretion of the lender and subject to meeting the Scheme eligibility criteria. For early-stage businesses in their first two years of trading, you might want to consider a startup loan instead. These types of loans are specifically designed with new businesses in mind.

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CBILS vs Recovery Loan Scheme (RLS) comparison - What’s the difference?

The biggest difference is that the UK Government isn't covering any loan costs for the Recovery Loan Scheme as they did with CBILS. The original Recovery Loan Scheme offered higher loan amounts (up to £10 million) compared the CBILS and the new RLS. The new RLS loans are available to a wider range of businesses.

All Schemes have the same loan term period of up to six years. So the two big differences are that the amount you can borrow has decreased and the Government won’t pay the interest on your behalf for the first 12 months, nor will they pay an upfront fee on your behalf.

See our table below to compare the differences between the Coronavirus Business Interruption Loan Scheme (CBILS) and the Recovery Loan Scheme (RLS):

Loan Amount £50,000 to £5 million £1,000 to £10 million £1,000 to £2 million
Term Up to 6 years Up to 6 years Up to 6 years
Government pays first 12 month’s interest Yes No No
Government pays upfront lender fees Yes No No
Government Lender Guarantee 80% 70% 70%
Personal Guarantee No PG's on loans up to £250,000 No PG's on loans up to £250,000 PG's may be required, at a lender's discretion
Minimum trading history 1 to 2 years No minimum No minimum
Minimum annual turnover No minimum No minimum No minimum
Closing date 31 March 2021 30 June 2022 30 June 2024

Recovery Loan Scheme accredited Lenders

The Recovery Loan Scheme (RLS) is managed by the British Business Bank and is only available through accredited lenders. There are 8 lenders accredited for the new iteration of the recovery loan scheme (RLS) so far - here's a list of the lenders:

  • Atom Bank
  • Bank of Scotland
  • BCRS Business Loans
  • CWRT
  • DSL Business Finance
  • First Enterprise
  • Genesis Asset Finance
  • Lloyds Bank
  • Natwest
  • Royal Bank of Scotland (RBS)
  • Ulster Bank

When does the Recovery Loan Scheme (RLS) close?

The Recovery Loan Scheme has now been extended and is scheduled to end on 30 June 2024. This will be subject to regular reviews and will be extended if necessary.

Why use Capalona?

Throughout coronavirus, we’ve strived to help as many businesses as possible find the right funding to tide them over this volatile economic period.

At Capalona, we work alongside FCA-registered UK lenders, so you can trust that you’re getting the best deals - our sole aim is to find you compare financial products to help your business grow and thrive.

As a broker, our service is completely free for you to use.

About the author

Simon Moorcroft
Written by Simon Moorcroft

Money Writer, Director and Co-Founder

Simon has over twelve years of experience in consumer and business finance. Simon is a Co-Founder and Director at Capalona and heads up the technology team, who utilises the latest technology to assist our customers in finding fast finance.

Updated: December 05, 2023
Published: April 08, 2021
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