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What is the Recovery Loan Scheme?

Updated: Nov 10, 2021

What is Recovery Loan Scheme?

The UK government has announced a brand new government backed loan scheme, aimed at supporting UK businesses as they recover and continue to grow after suffering the economic impacts of the Covid pandemic. The scheme is open to applications until December 2021, and replaces the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBL).

How does the scheme work?

The scheme is rolled out through accredited lenders including banks and alternative finance providers, allowing the government to guarantee up to 80% of a facility that is provided to the business. It is possible to apply for the scheme even if your business has received a CBILS or a BBL. The following facilities can be applied for:

  • Trade Finance

  • Invoice Finance

  • Term Loans

  • Overdrafts

  • Asset Finance

Businesses can apply for funding between £25,001 up to £10m for the named facilities.

Other aspects of the scheme include:

  • No personal guarantees under £250,000

  • A borrower’s principal private residence cannot be taken as security

  • Overdraft terms and loan terms between 3-4 years, invoice and asset finance up to 6 years

  • All interest must be paid by the business

  • The annual interest rate charged by companies cannot exceed 14.99%

  • Unlike CBILS, there is no minimum turnover requirement for businesses

The purpose of the scheme is to help businesses affected by Covid-19 and the facilities guaranteed under the scheme are intended to be used for business purposes, including managing cashflow, investment and growth. It is designed to support businesses that can afford the cost of taking out such additional finance for these purposes.

How do I apply?

Funding Routes can show you a list of accredited lenders depending upon the requirements for your business. All lenders are accredited by the British Business Bank (BBB). Get in touch with us today!

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