What is the Government's Recovery Loan Scheme ('RLS')?

Launched on 6 April 2021 the Recovery Loan Scheme ('RLS') provides financial support to businesses across the UK as they recover and grow following the coronavirus pandemic.  You can apply to the scheme if Covid-19 has affected your business.  You can use the finance for any legitimate business purposes - including managing cashflow, investment and growth.  However, you must be able to afford to take out additional debt finance for these purposes.

The RLS is still open to you even if you have already borrowed from any of the other coronavirus loan schemes - namely:

  • The Bounce Back Loan Scheme ('BBLS')
  • The Coronavirus Business Interruption Loan Scheme ('CBILS')
  • The Coronavirus Large Business Interruption Loan Scheme ('CIBILS')

However the amount you have borrowed under an existing scheme may, in certain circumstances, limit the amount you may borrow under RLS.  RLS will run until 31 December 2021, subject to review and normal bank lending criteria will be in place.

How it works


The Recovery Loan Scheme will initially be available through a number of lenders accredited by the British Business Bank. New lenders under the scheme will be listed on the British Business Bank website as they become accredited. 

Please note: A key aim of the Recovery Loan Scheme is to improve the terms on offer to you but if a lender can offer you the choice of a commercial loan on better terms without requiring the guarantee provided by the RLS, they should do so. 

When looking to borrow, you should first approach your own finance provider.  You may also consider approaching other lenders if you’re unable to access the finance you need.

Types of finance

A lender can provide up to £10 million as one of the following facilities:

  • Term loan
  • Overdraft
  • Invoice finance
  • Asset finance
  • Guarantees

RLS gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you are always 100% liable for the debt.  

If you’re borrowing £250,000 or less - the lender won’t take any form of personal guarantee.  If you’re borrowing more than £250,000 - the lender has the discretion to decide whether to take personal guarantees. 

However: for facilities above £250,000, personal guarantees may still be required at a lender's discretion but no recovery action can be taken over a Principal Private Residence and recoveries are capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied.

Key features of the scheme

  • Up to £10m facility per business guarantee to the lender to encourage lending
  • Interest and fees to be paid by the business from the outset
  • The maximum amount of a facility provided under the scheme is £10m per business (maximum £30m per group). Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
  • 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.     
  • Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
  • The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%.  
  • Term loans and asset finance facilities are available from three months up to six years.

Is more debt the answer?  A word of warning

Recent data published by the British Business Bank shows that businesses across the East of England received a total of £5bn in funding under the government's two largest Covid-19 loan schemes - CBILS and BBLS.  its likely some banks may be reluctant to advance more monies to some clients and they are more than likely to be looking carefully at any lending request.

Applying for a RLS could potentially indicate to the lender that you may have cashflow difficulties and your business cannot meet its liabilities as they fall due ... at which point it would be wise to seek advice.  We offer a free and confidential initial consultation meeting at one of our local offices where we can review your situation and provide advice on your way forward.  

Call us on 0800 331 7417