You're on the United Kingdom site →

Recovery Loan Scheme: Everything You Need To Know

We all know how difficult the last year has been, with many businesses being hit hard by the disruption caused by the pandemic.

As the country starts to open up again, you may benefit from the Recovery Loan Scheme to get your business back on track.

stacked coins chart

What is the Recovery Loan Scheme?

The UK government set up the Recovery Loan Scheme (RLS) to help businesses of all sizes access finance up to £10 million per business. The scheme replaces previous loan schemes such as the Coronavirus Business Interruption Loans Scheme (CBILS) and Bounce Back Loans (BBLS), and there are different types of finance available including loans, overdrafts, invoice finance facilities and asset finance facilities, to help businesses manage the transition between the pandemic and the new normal.

How much can you borrow?

The amount businesses can get through the RLS scheme depends on how much you’re borrowing, what type of finance you take, and the size of your business.

For term loans and overdrafts, you can borrow between £25,001 and £10 million per business, and for invoice or asset finance, you can borrow between £1,000 and £10 million per business. Individual businesses can borrow up to £10 million and up to £30 million across a group – although the actual amount that you’re eligible for as a business is at the discretion of the lender.

The scheme offers lenders a government-backed 80% guarantee, meaning they may offer better-value loans to a wider range of businesses that wouldn’t otherwise be eligible. As a borrower, you’re liable for 100% of the debt.

If you’re borrowing £250,000 or less, your lender won’t take any form of personal guarantee. If you’re borrowing more than that amount, it’s at the discretion of the lender as to whether they take a guarantee, but your Principal Private Residence – in other words, your home – will never be used as such a guarantee.

How long is the loan for?

For overdrafts and invoice finance facilities, the maximum term is 3 years. For loans and asset finance facilities, the maximum length is 6 years.

What are the interest rates?

Interest rates will vary between lenders, and may also be determined by your business’s circumstances. However, the government has given a maximum interest rate of 14.99% for the scheme.

What can the RLS scheme be used for?

Once you’ve secured finance with a lender, you can use the funds for any activities associated with running or growing your business. It could be used to manage cash flow difficulties, purchase equipment, pay a one-off cost, paying staff salaries, marketing costs, or anything else that will help you either with the day-to-day running of your business, or investing in its future.

What businesses are eligible to apply?

Almost all businesses that trade in the UK can apply for the RLS scheme. You must be able to show that:

  • Your business would be viable if it wasn’t for the pandemic
  • Your business has been impacted by the pandemic
  • You’re not in collective insolvency proceedings (unless your business comes under the Northern Ireland Protocol, where different eligibility rules may apply)

You can apply for the RLS even if you have already received government support under other loan schemes, as long as you meet all other criteria. However, the amount you can borrow may be restricted based on how much you borrowed under a previous scheme.

Businesses across all sectors are eligible for the scheme with the exception of:

  • Public sector bodies
  • State-funded primary and secondary schools
  • Banks, building societies and insurers (but not insurance brokers)


Table covered with work papers with two people leaning arms over the top

How to apply for the government loan scheme

There are a number of different lenders participating in the RLS, all of which have been accredited by the British Business Bank and are listed on its website.

You should approach your regular lender initially, but you may also approach other lenders if you can’t access the finance you need through your own bank. The RLS is designed to improve the terms on offer to you, but if there is a better deal available, a lender should offer this to you instead.

Alternatively, you may prefer to approach a broker who will be able to identify the bank that’s most likely to lend to your business.

How can I prove my business is viable?

One of the key eligibility criteria is that your business is viable, showing that you can meet the loan repayments. But how can you prove this? Whilst lenders may have some flexibility when it comes to assessing this, taking into account any difficulties your business may have faced as a result of Covid-19, it’s wise to have as much information about your business finances as possible.

The evidence required will vary between lenders but is likely to include recent accounts as well as historic accounts, details of assets, trading information and cash flow forecasts. Your lender will give you more details about what specific evidence they need to see.

The scheme doesn’t give any restrictions on turnover, but lenders may apply their own rules around this.

Your bank may also want to see details of what your loan will be used for, and the impact you expect it to have on your business growth. This information should be included in a business plan.

Recovery loan scheme credit check

As with any other type of borrowing, lenders will carry out credit checks as well as fraud, Anti-Money Laundering and Know Your Customer checks for all businesses applying for RLS.

When can you apply for RLS?

The scheme is open for applications now and will remain open until 31st December 2021, subject to review. There’s no maximum amount of funding that can be supported through RLS, so there’s no rush to apply for finance.

How does it work in Northern Ireland?

As mentioned above, if your business falls under the Northern Ireland Protocol, different eligibility criteria may apply. If this is the case for your business (it applies to all businesses based in Northern Ireland as well as some businesses based in Britain), you will need to comply with EU State Aid rules. You must also confirm that your business was not ‘undertaking in difficulty’ as of 31st December 2019.

Could your business benefit from the Recovery Loan Scheme?

Use our cash flow forecasting tool to model your future cash, spot any upcoming gaps, and prove your viability for the RLS.


Further reading:

Can A Business Grant Or Loan Keep You Afloat?


Louise Bayley-Boyd

Digital enthusiast, passionate about helping small businesses survive and thrive.