Business news

How to apply for funding through the Recovery Loan Scheme

How to apply for funding through the Recovery Loan Scheme
Dan Martin
Dan Martin
Freelance content creator & event host
Dan Martin Content & Events

Posted: Mon 6th Jun 2022

The Recovery Loan Scheme (RLS) is the UK government's scheme to help businesses deal with the impact of coronavirus.

RLS replaced the following schemes which closed on 31 March 2021:

  • Bounce Back Loans Scheme (BBLS)

  • Coronavirus Business Interruption Loan Scheme (CBILS)

  • Coronavirus Large Business Interruption Loan Scheme (CLBILS)

Originally announced by chancellor Rishi Sunak in the March 2021 Budget, the £75bn Recovery Loan Scheme was due to run until 31 December 2021, but in the November 2021 Budget, he said it has been extended until 30 June 2022.

According to the Financial Times, the government is planning to introduce a new £3bn-a-year business loan scheme once the Recovery Loan Scheme ends.

The newspaper says the new scheme will be backed by a 70% guarantee. However, unlike the other schemes, applicants will need to put up a personal guarantee.

How to apply for the Recovery Loan Scheme

What type of funding is available?

Depending on the lender, UK businesses can access term loans, overdrafts, asset finance and invoice finance.

How much funding can you access?

The minimum amount for term loans and overdrafts is £25,001 and for asset and invoice finance, a minimum £1,000 is available.

The maximum amount of funding available through the Recovery Loan Scheme is £10m.

What are the terms of the lending?

Lenders receive a government-backed guarantee but the borrower always remains 100% liable for the debt.

Unlike the previous schemes, there is no period during which businesses do not have to make repayments. For funding through the Recovery Loan Scheme, interest and fees need to be paid by the business from the outset.

The annual effective rate of interest and other fees by lenders cannot be more than 14.99%.

Personal guarantees are not permitted for facilities of £250,000 or less. Above £250,000 the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied. No personal guarantees can be held over principal private residences.

Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.

What is the eligibility criteria?

Businesses must be trading in the UK.

Business owners must confirm to the lender that they have been impacted by COVID-19.

Borrowers need to show their business is viable, although the British Business Bank said lenders "may disregard any concerns over its short-to-medium term business performance due to the uncertainty and impact of COVID-19".

Businesses must not be in collective insolvency proceedings.

The lender will make credit and fraud checks on all applicants as as customary checks such as 'know your customer' and anti-money laundering. The British Business Bank said the "checks and approach may vary between lenders".

There are no turnover restrictions for businesses accessing the scheme.

Businesses that have taken out a BBLS, CBILS or CLBILS facility are able to access the new scheme, although the amount they have borrowed under a previous scheme may limit the amount they can borrow under RLS.

Funding is provided at the discretion of the lender.

How do you apply for the Recovery Loan Scheme?

You need to apply directly with a lender. The British Business Bank said it has invited all lenders accredited for CBILS to appy to be accredited for RLS.

The latest accredited RLS lenders are published here.

The scheme was originally due to run until 31 December 2021 but in the 2021 Autumn Budget, the chancellor announced it has been extended until 30 June 2022.

What does the lender need from you?

When you apply for finance, you'll need to provide evidence to show that you can afford the repayments. Evidence is likely to include the following:

  • Management accounts

  • Business plan

  • Historic accounts

  • Details of assets

"Business owners have worked hard to survive and, in some cases, grow, against an extremely difficult economic backdrop," said Helen Bierton, Starling Bank’s chief banking officer. "As the economy starts to rebound, many will need additional help to support their recovery, investment and growth. Starling will be here with RLS lending to help with that.”

To find out more, visit Starling Bank's website.

Enterprise Nation Finance Hub

The Enterprise Nation Finance Hub provides personalised finance options for start-ups, small businesses, sole traders, freelancers and other business professionals. Take the Access to Finance tool and get recommendations tailored to your business needs.

Visit the Enterprise Nation Finance Hub here.

Dan Martin
Dan Martin
Freelance content creator & event host
Dan Martin Content & Events
I'm a freelance content creator and event host who helps small businesses and the organisations that support them. I have 18 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from billionaires like Sir Richard Branson to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I'm based in Bristol where I run and host regular events with the local small business community and have strong connections to major business organisations in the south west region. In total, I've hosted over 50 events; from intimate meet-ups to conferences with an audience of hundreds including events for international brands like Facebook and Xero. I'm also a big fan of podcasts having hosted Enterprise Nation's Small Business Sessions as well as lots of online events including Facebook Live interviews, webinars and three live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography. I'm here to help. I'm volunteering free advice calls of up to an hour as part of the Recovery Advice for Business scheme, over the next 6 months. Please get in touch to see how I can help your business. 

You might also like…

Start your business journey today

Take the first step to successfully starting and growing your business.