Recovery Loan Scheme (RLS)

What was 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).

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.

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How did 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.

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

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

The types of funding available to your business through the Recovery Loan Scheme (RLS) were 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

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What businesses qualified 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 was eligible to apply.

You were 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 would 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 was 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.

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

Yes, you could. UK businesses with CBILS, CLBILS, and BBLS facilities could 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 was 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.

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How did you apply for the Recovery Loan Scheme?

Applying for the Recovery Loan Scheme was straightforward. You could apply directly with an accredited Lender, or use a broker to help you. Along with your application, you would need to provide the following details:

• Management accounts
• Business plan
• Historic accounts
• Details of assets

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Did you need to provide a personal guarantee to get a Recovery Loan?

Personal guarantees were 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 was capped at a maximum of 20% of the outstanding balance after the proceeds of business assets have been applied.
• No personal guarantees could be held over Principal Private Residences.

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Did you have to pass a credit check to get a Recovery Loan?

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

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What were the interest rates for the Recovery Loan, and when did you repay?

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

Unlike previous covid schemes, there was no delay for loan repayment. The first repayment would depend on the lender’s policies, it might have been 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.

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Could you qualify for the Recovery Loan Scheme if my business had bad credit?

If you have bad credit, this may restrict the finance options available to you and also the interest rate you could secure.

If you’ve been refused credit in the past, you might still have been able to apply for the Scheme. Each lender reviewed each application on a case-by-case basis.

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

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Was the Recovery Loan Scheme available for sole traders?

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

Alternatively, you can apply for a sole trader loan.

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What term could you borrow over?

Terms depend on the product type you choose. For example, term loans and asset finance facilities were 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.

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Was the Recovery Loan Scheme available for startup companies?

Yes, the Recovery Loan Scheme was 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):

	CBILS	RLS	New 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 months 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

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Recovery Loan Scheme accredited Lenders

The Recovery Loan Scheme (RLS) is managed by the British Business Bank and was only available through accredited lenders. There were 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
• HSBC UK
• Lloyds Bank
• Natwest
• Royal Bank of Scotland (RBS)
• Ulster Bank

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When did the Recovery Loan Scheme (RLS) close?

The Recovery Loan Scheme (RLS) ended on the 30th June 2024 and was replaced by the Growth Guarantee Scheme (GGS).

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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 a range of trusted UK lenders - 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.