Recovery Loan Scheme

About the scheme

The Recovery Loan Scheme (RLS) is a government-backed loan scheme designed to support access to finance for UK businesses as they look to invest and grow.

It can support facility sizes of up to £2 million for borrowers outside the scope of the Northern Ireland Protocol ^{Read footnote text 1} . Borrowers in scope of the Northern Ireland Protocol may borrow up to £1 million, unless they operate in a sector where aid limits are reduced – in which case the maximum that can be borrowed is subject to a lower cap. These include agriculture, fisheries / aquaculture, and road freight haulage.

Businesses can use the finance for any legitimate business purpose – including managing cashflow, investment and growth. However, businesses must be able to afford to take out additional debt finance for these purposes.

The British Business Bank administers the scheme on behalf of the Secretary of State for Business and Trade.

See our list of accredited lenders

Key features of the scheme:

The Recovery Loan Scheme aims to improve the terms on offer to borrowers. If a lender can offer a commercial loan on better terms, they will do so.

Key features include:

• Up to £2 million per business group: The maximum amount of a facility provided under the scheme is £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 ^{Read footnote text 2} . Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts;
• Wide range of products: RLS supports term loans, overdrafts, asset finance and invoice finance facilities. Not all lenders will be able to offer all products;
• Term length: Term loans and asset finance facilities are available from three months up to six years, with overdrafts and invoice finance available from three months up to three years;
• Access to multiple schemes: Businesses that took out a Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or RLS facility before 30 June 2022 are not prevented from accessing RLS, but in some instances borrowing under these schemes may reduce the maximum amount the borrower is eligible for;
• Pricing: Interest rates and fees charged by lenders will vary and will depend on the specific lending proposal. The lender’s pricing will take into account the benefit of the Government guarantee;
• Personal Guarantees: 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 has completed its normal recovery process. The borrower always remains 100% liable for the debt;
• Decision-making delegated to the lender: RLS-backed facilities are provided at the discretion of the lender. Lenders are required to undertake their standard credit and fraud checks for all applicants.

The assistance provided through RLS, like many Government-backed business support activities, is regarded as a subsidy and is deemed to benefit the borrower. There is a limit to the amount of subsidy that may be received by a borrower, and its wider group, over any rolling three-year period. Any previous subsidy may reduce the amount a business can borrow. More information on subsidies is available here.

Eligibility criteria include:

• Turnover limit: The scheme is open to smaller businesses with a turnover of up to £45m (on a group basis, where part of a group);
• UK-based: The borrower must be carrying out trading activity in the UK and, for most businesses ^{Read footnote text 3} , generating more than 50% of its income from trading activity;
• Viability test: The lender must consider that the borrower has a viable business proposition but may disregard (at its discretion) any concerns over its short-to-medium term business performance due to the uncertainty and impact of Covid-19;
• Business in difficulty: The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings;
• Subsidy limits: Borrowers will need to provide written confirmation that receipt of the RLS facility will not mean that the business exceeds the maximum amount of subsidy they are allowed to receive. All borrowers in receipt of a subsidy from a publicly funded programme should be provided with a written statement, confirming the level and type of aid received

• ^{Return to footnote location 1}

  The Northern Ireland Protocol has now been amended by the Windsor Framework, a legal agreement which changes how the Northern Ireland Protocol operates. References to the “Northern Ireland Protocol” throughout these pages should be understood accordingly. For more details on this, please see https://www.gov.uk/government/publications/the-windsor-framework.

• ^{Return to footnote location 2}

  All borrowers will need to answer some questions to determine whether they are inside or outside the scope of the Northern Ireland Protocol. For borrowers in scope of the Northern Ireland Protocol the maximum amount they may borrow is £1m unless such borrower operates in a sector where aid limits are reduced, in which case the maximum that can be borrowed is subject to a lower cap. These include agriculture, fisheries / aquaculture and road haulage.

• ^{Return to footnote location 3}

  Charities and Further Education colleges are exempt from complying with this criterion for facilities offered after 9 March 2023