The Recovery Loan Scheme (RLS), first introduced by the British Business Bank in 2021 and the successor to the Coronavirus Business Interruption Loan Scheme (CBILS), was created as a measure and means to support businesses by providing access to finance as they recover and grow following the pandemic


Fast forward to the summer of 2022, the scheme was extended for the third time to provide UK businesses with a much-needed option for finance while they continue to struggle with the after-effects of Covid-19, as well as the new economic challenges brought by the cost of living and energy crises, and the changed world we all now operate in. 

The scheme aims to help smaller businesses with a turnover of up to £45 million, across the UK, to access finance up to £2 million (per business group) to aid their recovery from the impact that the Covid-19 pandemic had on their growth. Backed by the British Business Bank, the scheme is delivered via a wide range of accredited lenders, from high street banks to Community Development Finance Institutions like Let’s Do Business Finance.

The scheme was designed to appeal to businesses that can afford to take out additional finance, and can be used for legitimate business purposes from managing cashflow to investing in growth through staffing, machinery
and more. 

One such business was AMACK (AYM) – a sustainable clothing brand who used its RLS facility of £70,000 to take on a new seamstress and boost its productivity. The scheme aims to improve the terms on offer to borrowers when taking out additional debt finance to aid their recovery from the pandemic, and fuel their growth – but if a lender can offer an alternative loan on better terms, they will do so.


Key features and changes
The new iteration of the scheme, which launched in August 2022, keeps the main themes of the previous schemes, but with some key differences. As with the previous extension of the scheme in January 2022, the maximum turnover for eligible businesses remains at £45 million, but the maximum amount permitted to lend per business group has seen a decrease from £6 million down to £2 million. The minimum facility sizes vary, but still start at £25,001 for term loans and overdrafts.

Term loans and asset finance facilities are still available from three months for up to six years, with overdraft and invoice finance available from three months for up to three years. This remains the same as the previous iterations of the scheme; and borrowers that took out a combination of CBILS, BBLS or RLS facility prior to June 30th 2022 are eligible to take out additional finance after August 1st 2022. The only possible hitch to this is that previous borrowing under these schemes may reduce the maximum amount that a business can borrow due to new State Aid rules. 

One key change to the scheme this time around is the feature of personal guarantees being accepted at any
size facility. Previous schemes accepted personal guarantees only if the facility was over £250,000, but from August 1st 2022, personal guarantees can be taken at the lender’s discretion, on any size loan, although as before, they are still not able to take a charge over the guarantor’s main family home.

Another move away from previous versions of the scheme is the removal of the need for a business to undertake a Covid-19 impact test which, together with the decision-making being delegated to the lender, may be good news for businesses who are considering applying for the scheme.

Accessing the scheme
The Recovery Loan scheme is only available through the British Business Bank’s accredited lenders, which are listed on their website. It’s worth bearing in mind that some lenders that offered facilities under previous iterations of RLS, or the BBL or CBIL schemes may not be accredited to offer RLS under the new extension of the scheme. 

In order to obtain an RLS facility, your business will have to provide lenders with details of any finance taken out via previous schemes, certain documents from your management and historic accounts, as well as details of business assets and your business plan.

Lenders for the scheme can vary from high street and challenger banks to asset based and Community Develop-ment Finance Institution, like Let’s Do Business Finance, who are accredited lenders under the new scheme and able to lend to eligible businesses under the scheme until March 2023. 

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