Covid-19: The Recovery Loan Scheme

Posted Thursday 10th June 2021

While mechanisms such as the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) are no longer open for applications, the government launched a new debt finance scheme – the Recovery Loan Scheme (RLS) – in March 2021. The RLS, much like its predecessors, is intended to support businesses of all sizes recovering from the Covid-19 pandemic.

The new scheme will run until 31 December 2021 (subject to review) and is also open to businesses that have previously taken out a BBLS or CBILS facility. There are no requirements in relation to turnover, and lending up to £10 million per business is covered – however the amount available and the specific terms of a loan may be restricted by other schemes under which a business has received financial support.

The following types of finance are available under the RLS:

  • Term loans or overdrafts of between £25,001 and £10 million
  • Asset or invoice finance of between £1,000 and £10 million

The loans are available through a network of accredited lenders.


To be eligible, your business must:

  • carry out trading activity in the UK in any business sector except for:
  • banks, building societies, insurers and reinsurers (save for insurance brokers);
  • public-sector bodies or state-funded primary and secondary schools;
  • have been impacted by Covid-19 (you will need to confirm this to your lender as part of the application);
  • be viable, save for any short or medium term concerns caused by the pandemic;
  • not be in collective insolvency proceedings.

The funding provided can be used for cashflow management, investment and/or growth. You will need to provide evidence of your ability to repay the loan as part of your application (by means of, for instance, historic filed accounts, management accounts, a business plan and/or details of the business’ assets).

The loans themselves are 80 per cent backed by the government, giving a guarantee to lenders where businesses fail to pay back their debt.  However, the business remains liable for 100% of the full loan amount.

The term of the loan will depend on the type of finance you apply for but will range from 3 months to 6 years. Interest and fees will be paid by the business from the outset, unlike under the BBLS. The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%.  The extent of any personal guarantee is also restricted: lenders may not take any form of personal guarantee for facilities of up to £250,000, and the amount beyond this threshold is capped at 20 per cent of the outstanding balance once the proceeds of business assets have been applied.  No personal guarantees can be held over Principal Private Residences.

How to Apply

For a list of British Business Bank accredited lenders providing RLS loans, as well as further details of the amounts and types of finance available through them, please refer to:

This article is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action.

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