You might have already heard of the Recovery Loan Scheme (RLS) which was introduced in April 2021 as a government-backed loan scheme to support access to finance for UK businesses as they look to invest and grow.

In April 2024, it was announced that the scheme, which is administered by The British Business Bank on behalf of the Secretary of State for Business and Trade, would continue to run until the end of March 2026, but it would be renamed the Growth Guarantee Scheme.

Visit our blog on the Growth Guarantee Scheme for the latest information.

Details on the new iteration of the RLS were announced as Phase 3 (or 3.0) which is available even if a business has previously taken advantage of RLS, CBILS (Coronavirus Business Interruption Loan Scheme), CLBILS (Coronavirus Large Business Interruption Loan Scheme) or BBLS (Bounce Back Loan Scheme).

RLS eligibility

• Turnover limit: The scheme is open to smaller businesses with a turnover of up to £45m.
• UK-based: The borrower must be carrying out trading activity in the UK.
• Difficulties: The business must not be in difficulty (including not being in relevant insolvency proceedings.)
• Covid-19 Impact Test: For most borrowers there is no requirement to confirm they have been affected by Covid-19.
• Viability Test: The lender must consider that the borrower has a viable business proposition, but it may disregard any concerns over short-to-medium term business performance due to the uncertainty and impact of Covid-19.
• Subsidy limits: Written confirmation will need to be provided in receipt of the RLS to confirm that it will not mean that the business exceeds the maximum amount of subsidy they are allowed to receive.

What type of businesses are eligible?

• Sole traders
• Corporations
• Limited partnerships
• Limited Liability Partnerships (LLP)
• Co-operatives and community benefit societies
• Any other legal entity carrying out business activity in the UK.

Banks, building societies, insurance companies, public-sector bodies and state funded primary and secondary schools are not eligible.

Further information on eligibility can be found here.

Features of the scheme

The RLS aims to improve the terms on offer to borrowers and if a lender can offer a commercial loan with better terms, they will look to do so.

Key features include:

Facility size

• Up to £2 million per business group (for borrowers outside the scope of the Northern Ireland Protocol) and up to £1 million per business group (for Northern Ireland Protocol borrowers.)
• Minimum facility sizes vary from £1,000 for asset and invoice finance and £25,001 for term loans and overdrafts.

Products and term length

• Supports term loans, overdrafts, asset finance and invoice finance facilities.
• Term loan and asset finance facilities are available from three months up to six years.
• Overdraft and invoice finance facilities available from three months up to three years.

Access to multiple schemes

• Businesses that took out a CBILS (Coronavirus Business Interruption Loan Scheme), CLBILS (Coronavirus Large Business Interruption Loan Scheme), BBLS (Bounce Back Loan Scheme) or RLS facility before 30^th June 2022 are not prevented from accessing RLS however in some instances this could affect eligibility.  

Pricing and Personal Guarantees

• Interest rates and fees charged by lenders will depend on the specific proposal and will take into account the benefit of the Government guarantee.
• Personal guarantees can be taken at the lender’s discretion (in line with their normal commercial lending practices).
• Principal Private Residences cannot be taken as security within the scheme.
• Guarantee is to the lender – the scheme provides the lender with a 70% government-backed guarantee against the outstanding balance of the facility after it’s completed its normal recovery process.

Decision-making delegated to the lender

• RLS facilities are provided at the discretion of the lender who is required to undertake all their usual credit and fraud checks for all applicants.

RLS Accredited Lenders

A list of accredited lenders who can facilitate the scheme can be found on the British Business Banks website: Recovery Loan Scheme: current accredited lenders - British Business Bank (british-business-bank.co.uk)

It is worth noting that some lenders that offered facilities under the previous iterations of the scheme between April 2021 and June 2022 may not still be accredited to offer the scheme from August 2022.

Further information about the scheme including eligibility, the application process, frequently asked questions, information about subsidies and comparisons to previous schemes can be found on the British Business Bank website.

Making the right decision for your business

As an ethical and FCA-regulated commercial finance intermediary, it’s our duty to ensure our clients make informed financial decisions, and to do this we need to understand the intricacies of your business.

If you’re interested in the RLS and would like to learn more or receive some guidance on making the right decision for your business, our dedicated Loans Specialist James Lewis is on hand to have a no-obligation chat with you to discuss the scheme in more detail and talk you through your options.

James Lewis: james.lewis@bluestone.app | 07715 425 821

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BS.202309.01BL13

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