Earlier COVID-19 support schemes such Bounce Back Loans have now ended and have been replaced by the new Recovery Loan Scheme (RLS). We look at the latest financial measure to help businesses recover from the impact of the pandemic.

The Recovery Loan Scheme (RLS) is available for businesses through a number of British Business Bank accredited lenders across the UK.

The Recovery Loan Scheme – key facts

The new Recovery Loan Scheme (RLS) launched on 6 April 2021 and will run to 31 December 2021, subject to review.

Finance borrowed under the scheme can be used for any legitimate business purpose, including managing cash flow, investment and growth. The RLS is designed to appeal to businesses that can afford to take on additional debt for these purposes.

Interest rates are capped at 14.99% although they are expected to be much lower in most cases. Interest and fees will have to be paid from the outset.

The scheme offers term loans, overdrafts, asset and invoice finance. The maximum facility is £10 million per business whilst the minimum facility varies: starting at £1,000 for asset and invoice finance and £25,001 for term loans and overdrafts.

Term loans and asset finance facilities are available for up to six years. The borrowing period for overdrafts and invoice finance is up to three years.

The government guarantees the lender 80% of the finance. No personal guarantees will be taken on facilities up to £250,000, and the borrower’s principal private residence cannot be taken as security when borrowing more than this.

Recovery Loan Scheme eligibility

• No turnover restrictions apply
• Open to businesses trading in the UK:
  – that can show their business is viable, or would be if it wasn’t for the pandemic
  – that are impacted by COVID-19
  – and are not in collective insolvency proceedings
• Can be used on top of previous COVID-19 loan schemes. Note: previous borrowing may restrict how much can be borrowed under the RLS
• Not open to public sector bodies, state-funded primary and secondary schools, banks, building societies, insurers, or reinsurers.

Credit and fraud checks will be carried out on all applicants and the checks and approval process may vary between lenders. When making their assessment, lenders may overlook concerns over short to medium-term business performance caused by the pandemic.

Loans are available through a network of accredited lenders and full details are here