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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 13/04/2021

At a glance

  • The Recovery Loan Scheme (RLS) exists to help viable UK businesses struggling due to the pandemic
  • Loans start from £1,000 depending on the type of finance used
  • Personal guarantees are not required for loans below £250,000

What is the Recovery Loans Scheme?

The Recovery Loans Scheme launched on 6 April 2021 and was the follow-up Government business loans scheme after the Coronavirus Business Interruption Loans Scheme (CBILS) and Bounce Back Loans (BBLS). The scheme is there to support UK businesses with funding to help them manage cashflow, make investments and for business growth. The scheme offers different types of finance, term loans, overdrafts, invoice finance and asset finance.

How much can you borrow under the RLS?

UK businesses can apply to borrow from £1,000 up to £10 million per business. The minimum varies depending on the type of borrowing used. The minimum for asset and invoice finance is £1,000.  Businesses wanting to get a business loan or overdraft will need to apply for at least £25,001. There is a maximum of £30 million in total across a business group.

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The steps to apply for a Recovery Loan

Go direct or speak to a broker?

Businesses can choose to apply directly to a lender or to speak to a broker. Speaking to a broker means that they can help to identify the right type of borrowing and the best lender for your business. They can also save businesses a lot of time contacting multiple lenders to establish which are happy to consider their application.

Prepare the paperwork

To make an application businesses will need their management accounts, business plan, historic accounts and details of any business assets. The broker and lender can use these to make sure a loan is affordable and viable.

Be clear about the purpose of the loan

The lender will also want to know the purpose of the loan and any expectations of growth or return this might generate in the future. This detail should be part of your business plan.


A credit check

Lenders will also need to complete checks to ascertain the credit score of the business and its owners and/or directors, fraud checks under anti-money laundering laws and identity checks to meet regulatory requirements.

Are personal guarantees required under FLS?

Loans of £250,000 or less do not require any personal guarantee. Businesses borrowing more than this will need to provide a guarantee however, private residences are excluded from this and there is a cap of 20% that can be claimed by the lender after the business assets have been used.

What are the interest rates for the RLS?

Interest rates for the Recovery Loans Scheme will depend on the lender and the circumstances of the business applying for finance. The Government has stated a maximum interest rate cap of 14.99%.

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How long is the FLS?

Term loans and asset finance can last from three month up to six years. Invoice finance and overdrafts are from three months up to three years.

What businesses can apply to the Recovery Loans Scheme?

The majority of UK business are eligible as long as they have been impacted by Covid-19 and are trading. Businesses need to be considered a viable proposition by the lender. The lender may choose to ignore current short to medium term issues of performance due to the pandemic.
There are also no turnover restrictions stated in the scheme. However, lenders can apply their own rules about turnover and businesses should check these either directly or via a business loans broker.
Businesses not eligible for the scheme are banks, building societies, insurers, reinsurers, public sector bodies, and state funded schools.

What is the difference between CBILS and the Recovery Loans Scheme?

Both schemes have been created by the Government to help business impacted due to the Coronavirus pandemic. CBILS offered businesses a 12-month interest free and payment free period. The RLS does not have this grace period.

What is the difference between the Recovery Loans Scheme and a business loan?

The main difference is for the lender rather than the business with the Government offering a guarantee of up to 80% of bad debts under the RLS, while a business loan would not offer this protection. In all other respects they are the same requiring businesses to meet the lender’s criteria, charging an interest rate and businesses remaining responsible for the repayment of the debt.

What lenders are in the Recovery Loan Scheme?

Right now there are 18 lenders in the scheme, but not all lenders will offer all types of finance available. Those offering loans include:

  • Aldermore
  • Arbuthnot Latham
  • Bank of Scotland
  • Barclays
  • Clydesdale Bank
  • Dankse Bank
  • Lloyds Bank
  • NatWest
  • OakNorth Bank
  • Paragon Bank
  • Santander
  • Secure Trust Bank
  • Skipton Business Finance
  • RBS
  • Ulster Bank
  • Yorkshire Bank

Can I get a Recovery Loan if I already have used CBILS or a BBL?

Yes, those businesses that have taken out a BBBL or CBILS can still apply for a Recovery Loan. However, the amount you have already borrowed may prevent or limit the amount you can borrow under the Recovery Loan Scheme.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

At a glance

  • The Recovery Loan Scheme (RLS) exists to help viable UK businesses struggling due to the pandemic
  • Loans start from £1,000 depending on the type of finance used
  • Personal guarantees are not required for loans below £250,000

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