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What is the Government’s Covid-19 Recovery Loan Scheme?

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Is a Recovery Loan right for your company?

The new Recovery Loan Scheme (RLS) was launched on 6 April 2021 to provide financial support to businesses across the UK as COVID restrictions are lifted and companies once more begin opening their doors to customers and looking to recover and grow following the coronavirus pandemic.

How much can I borrow through the Recovery Loan Scheme?

Two main types of borrowing can be secured using the RLS, with both traditional bank lending such as loans and overdrafts being available as well as more specialist asset-based finance options. The amount you may be able to borrow through the scheme will depend on the form the borrowing will take:

  • Loans and overdrafts available between £25,000 – £10m over six-year terms
  • Asset and invoice finance available between £1,000 – £10m over three-year terms
Does my business qualify for the Recovery Loan Scheme?

Recovery Loans are designed to be as inclusive to all businesses as possible, unlike previous Government-backed Covid loans where different schemes were available for different sized businesses. The scheme is open to all UK businesses except banks, building societies, insurers, reinsurers, public sector bodies, and state-funded primary and secondary schools.

Business must be viable or would be viable were it not for the pandemic and they must have been impacted by Covid-19 in some way. Although some form of financial distress is accepted, the company must not be in collective insolvency proceedings when applying for borrowing through the Recovery Loan Scheme. There are certain other requirements if your business has operations in Northern Ireland.

The Government will provide 80% security to lenders and no personal guarantees will be needed for borrowing up to £250,000. The loans are available through a range of accredited lenders including the major banks, with more accredited lenders to be added to the scheme. Applications will be accepted until 31 December 2021, at which point the scheme is set to close.

What if I have already had a CBILS or Bounce Back Loan?

The good news is that even if you have previously taken out a CLBILS, CBILS or Bounce Back Loan, you are still eligible for the Recovery Loan Scheme if your company requires additional funding.

However, you must remember that Recovery Loans, as well as any CLBILS, CBILS or Bounce Back Loans you may already have, are just that – loans. You must be certain your company will be in a position to be able to repay any borrowing when the time comes.

One of the major appeals of a Recovery Loan is that there is no need to provide a personal guarantee for loans taken up to £250,000. This means that if your company is unable to repay this loan, you will not be held personally liable for the money owed. However, this does not mean that taking out a Recovery Loan is completely without risk.

Where can I get further advice

BTG Advisory is here to provide you with the help and advice you need as you prepare your business for a life after Covid-19 restrictions. Whether you are suffering cash flow problems, are considering obtaining further funding, or are unsure about whether your business is still viable, we can help guide you in the right direction. Do get in touch with us today. We look forward to helping.

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