Recovery Loan Scheme: access business loans up to £10 million

What is the Recovery Loan Scheme?

The Recovery Loan Scheme (RLS) is to replace other Covid loans that we’ve seen over the past 12 months, including the government Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS), which both ended on 31 March.

The RLS hopes to help businesses raise the finance they need to recover from the pandemic as restrictions lift across the country.

With the RLS, businesses can apply for a loan of between £25,000 and £10 million. Any loans are 80 per cent backed by the government, giving a guarantee to lenders if businesses are unable to pay back their debt. The borrower is 100 per cent liable for the repayments.

There’s also a cap on interest rates at 14.99 per cent, although the government expects this to be much lower in the ‘vast majority of cases’. Just note that you’ll need to pay any interest yourself straight away, as well as any fees (unlike with the Bounce Back Loan Scheme).

The RLS was due to end on 31 December 2021, but the Chancellor announced in the Autumn Budget that it will now run until 30 June 2022. However, businesses will only be able to apply for £2 million and the government guarantees 70 per cent of the loan, rather than 80 per cent.

How can I apply?

You can apply to the scheme if Covid-19 has affected your business, or if you’ve used one of the other loan schemes before, like the BBLS or CBILS.

To be eligible, you must be trading in the UK and have a viable business (were it not for the pandemic).

The loan can be used to support your business with, for example:

• managing cashflow
• investment
• growth

For more information on how to apply and to choose an accredited lender, visit the British Business Bank website.

Emerging from the crisis

The launch of this new scheme comes as England continues along its roadmap out of lockdown.

The Chancellor, Rishi Sunak, says: “As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis.”

If you’re starting up your business again soon, read our guide to reopening for a checklist and helpful tips.

Other government loan schemes and grants

This financial support is in addition to the Restart Grants announced in the Budget last month. These grants are administered by local authorities and offer businesses a one-off cash grant of up to £18,000.

Businesses with employees may also be able to benefit from the Help to Grow scheme and the extension of furlough until the end of September.

David Postings, Chief Executive of UK Finance, said: “The banking and finance industry remains committed to supporting businesses of all sizes through the next phase of the pandemic response. As focus turns to economic recovery, we know that many firms are still facing uncertainty. The new Recovery Loan Scheme, alongside other commercial financial support, will help firms rebuild and invest for future growth.”

More guides for small businesses

• A reopening guide for small businesses
• Coronavirus: what support is available for small businesses and the self-employed?
• Survey reveals financial impact of pandemic on small businesses
• Expert wellbeing resources for the self-employed
• What does business insurance cover?