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What is the Recovery Loan Scheme and how can it help you

07/04/2021

The Recovery Loan Scheme (RLS), which launched on the 6th April, aims to provide government-backed funding to businesses affected by the coronavirus pandemic through the remainder of 2021.

The new scheme replaces the Coronavirus Business Interruption Loans Scheme (CBILS), Bounce Back Loan Scheme (BBLS) and Coronavirus Large Business Interruption Loans Scheme (CLBILS), which came to an end on 31 March and resulted in more than £75 million being lent to businesses affected by the pandemic.

The new scheme, which was announced in the 2021 Budget, is intended to increase the supply of financial support to businesses of all sizes to help them recover from the impact of the pandemic.

What does the new scheme offer?

The Recovery Loan Scheme enables eligible businesses to apply for finance up to a value £10 million, with terms of up to 6 years. Unlike the CBILS, the government will not cover the cost of any upfront lender fees or the first 12 months of interest, however they will be providing an 80% guarantee to lenders in a bid to increase the availability of funding through the scheme.

Like the CBILS, the Recovery Loan Scheme includes term loans, overdrafts, invoice finance and asset finance, and will be provided by a network of accredited lenders. Under this scheme businesses can apply for term loans and overdrafts between £25,001 and £10 million, or invoice finance and asset finance facilities between £1,000 and £10 million.

As with the CBILS, personal guarantees are not permitted on finance up to £250,000 when using this scheme, and your principal private residence cannot be taken as security.

However, you must be able to demonstrate that your business has been impacted by Covid-19, be carrying out trading activity in the UK, and have a viable business proposition. Interest rates on borrowing are capped at 14.99%.

How can this scheme help you?

Depending on your current and future needs, there may be a number of options available to your business and the Recovery Loan Scheme is hoped to add to that.

Indeed, a key aim of the scheme is to improve the terms on offer to businesses, but if a lender can offer a facility on better terms, without requiring the guarantee provided by the Recovery Loan Scheme, they must do so.

There are no restrictions on how the finance secured under this scheme can be used, so whether you’re looking to improve your cash flow, fund growth, invest in new opportunities or refinance any existing facilities, it is worth exploring the options available to your business.

As an independent and FCA-regulated finance broker, we’re committed to helping business find the most suitable commercial finance available, and we’d be happy to talk to you further about your requirements.

If you’re ready to further explore how the right funding could support your business, call our expert funding consultants on 0800 9774833. Or, if now isn’t the best time to talk, request a call back and we’ll give you a call at a time that suits you.

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Some of the funders we work with

  • Nucleus Commercial Finance
  • FIBR Tech Limited
  • Bibby Financial Services
  • Partnership Invoice Finance
  • Santander Corporate & Commercial
  • iwoca
  • MarketFinance
  • Secure Trust Bank
  • InvoCap
  • Time Finance
  • Investec
  • Metro Bank SME Finance
  • Blazehill Capital
  • Close Brothers Invoice Finance
  • Clear Factor
  • Team Factors
  • inFund
  • Accelerated Payments
  • MaxCap
  • Regency Factors
  • Davenham Trade Finance
  • Skipton Business Finance
  • Creative Capital
  • Asset Advantage
  • Davenham Asset Finance
  • Ultimate Finance Group
  • Aldermore Invoice Finance
  • Berkeley Trade Finance Ltd
  • Roma Finance
  • Trade Finance Partners
  • 4Syte
  • Shawbrook Business Credit
  • Barclays
  • ABN AMRO Commercial Finance
  • Boost Capital
  • Sonovate
  • Pulse Cashflow Finance
  • Leumi ABL
  • Haydock Finance Ltd
  • Merchant Money
  • Giant
  • IGF Invoice Finance
  • Royal Bank of Scotland
  • Peak Cashflow
  • Woodsford Tradebridge
  • PNC Business Credit
  • Lloyds Bank Commercial Finance
  • Optimum Finance

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