Post-Covid Business Recovery: The Recovery Loan Scheme (RLS)

Last post: Apr 15, 2021

With lockdown restrictions being lifted, and the application window for CBILS, CLBILS and BBLS closed, it’s now time to focus on the recovery and growth of your business and the financial support you need to put in place.

We always advise our clients to plan ahead. Usually this means producing robust cash flow forecasts to predict any pinch points in the business. Purely by completing this task will force you to look at and understand where all the revenue and cost opportunities are and will give a clear picture of what cash will be available at any time.

Remember it is just a forecast and this changes so it should be updated monthly and preferably weekly. Knowing when a business might run out of cash or cash becomes tight allows for actions to be taken to address these short-term challenges. What's more challenging, is running out of cash and not even know it was happening.

For businesses looking for finance in the next 6-12 months - whether that is for working capital or growth - the new Recovery Loan Scheme may be just one option.

What is the Recovery Loan Scheme?

The Recovery Loan Scheme has been put in place to provide financial support to UK businesses, in aiding their recovery and growth following the coronavirus pandemic. The scheme is designed for businesses who can afford to take out additional borrowing.

This new government scheme, which launched on 6th April 2021, has replaced the previous Coronavirus Loan Schemes, namely; the Coronavirus Business Interruption Loan Scheme (CBILS); the Coronavirus Large Business Interruption Loan Scheme (CLBILS); and the Bounce Back Loan Scheme (BBLS). 

If your business has already borrowed from any of the above schemes, you are still able to access the RLS without having to refinance any of its existing CBILS, CLBILS or BBLS. The maximum the business can borrow depends on the lender's assessment and scheme requirements.

The Recovery Loan Scheme criteria

Unlike the other coronavirus schemes, there is no turnover restriction for businesses accessing the RLS. The scheme is available to start up businesses at the discretion of the lender, however there may be more suitable options which can be discussed.

The maximum amount of an RLS facility available to any one business is £10m, and £30m per group. The minimum facility size for terms loans and overdrafts is £25,001, and £1,000 for asset finance and invoice finance.

The level of maximum funding will be based on (i) double the businesses wage bill for 2019 or last year available, (ii) 25% of the applicant's turnover in 2019, or (iii) the applicant's liquidity needs for the coming 12 months (for large enterprises) or 18 months (for SMEs). If a business, or any of its linked or partner enterprises (including private equity and venture capital linked enterprises), have borrowed under CBILS or CLBILS then this will count towards a business' maximum amount. [Source: British Business Bank]

One of the key differences from the previous coronavirus schemes is that businesses are required to meet the costs of interest payments and any fees associated with the RLS facility from the outset. Although the annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%.

Lenders will be required to undertake standard credit, fraud, AML and KYC checks for all applicants. When making their assessment, lenders may overlook concerns over short-term to medium-term performance owing to the pandemic. The checks and approach will vary between lenders. 

A business has to be viable to lend to - they cannot be, at the time of application, subject to relevant insolvency proceedings.

The Recovery Loan Scheme is set to run until 31 December 2021, subject to review.

The British Business Bank has set out these guidelines which have to be met by the borrower to access the scheme. However, each application will be assessed at the discretion of the lender and within their own internal criteria. This means that lender appetite will be key to the success of each application.


The scheme gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you remain 100% liable for the debt.

Personal guarantees cannot be taken for facilities up to £250,000. If you are borrowing more than £250,000, the lender has the discretion to decide whether to take personal guarantees. These will be 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.

A key aim of the RLS is to improve the terms on offer to borrowers, but if a lender can offer a borrower the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so. Of course, this may require a personal guarantee as per normal lending.

Types of finance available

Term Loans                                Asset Finance

£25,001 - £10m                         £1000 - £10m

Up to 6 years                               Up to 6 years

Overdrafts                                 Invoice Finance

£25,001 - £10m                        £1000 - £10m

Up to 3 years                             Up to 3 years

How to apply

The scheme will be available through a selection of lenders accredited by the British Business Bank (BBB).

When looking to borrow, you should first approach your own finance provider – CLICK HERE to find out if your bank is accredited.

Although the lenders on this list are accredited by the BBB, not every lender can provide every type of finance available under RLS, and the criteria and amount of finance offered varies between lenders. Each application will be assessed at the discretion of the lender and within their internal criteria. This means that lender appetite will be key to the success of each application.

If you are unsuccessful with your bank, or would like to explore alternative options, please feel free to get in contact to discuss your requirements with a member of our team.