What is the Recovery Loan Scheme?

The new iteration of the Recovery Loan Scheme (RLS) which launched in August 2022 is designed to support access to finance for UK small businesses as they look to invest and grow.

The Recovery Loan Scheme aims to improve the terms on offer to borrowers. If we can offer a commercial loan on better terms, we will do so. Businesses that took out a CBILS, CLBILS, BBLS or RLS facility before 30 June 2022 are not prevented from accessing RLS from August 2022, although in some cases it may reduce the amount a business can borrow.

Recovery Loan Scheme-backed facilities are provided at our discretion. We are required to undertake standard credit and fraud checks for all applicants.

Key scheme features include:

Up to £2m facility per business group: The maximum amount of a facility provided under the scheme is £2m per business group for borrowers outside the scope of the Northern Ireland Protocol, and up to £1m per business group for Northern Ireland Protocol borrowers. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
A borrower in scope of the Northern Ireland Protocol may borrow up to £1m per business group, 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 freight haulage.
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.
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.
Subsidy: 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.
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.
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.
Northern Ireland Protocol: All borrowers will need to answer some questions to determine whether they are inside or outside the scope of the Northern Ireland Protocol, to determine the relevant subsidy limit and hence the potential maximum amount they can borrow under RLS.

Eligibility criteria includes:

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.
No Covid-19 impact test required: Unlike with the previous phases of the scheme, for most borrowers there is no requirement to confirm they have been affected by Covid-19. For charities and Further Education colleges, confirmation of Covid-19 impact will still be required in some instances.
Viability test: The lender will consider that the borrower has a viable business proposition but may disregard 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.
Purpose: the facility must be used to support trading in the UK and cannot be used to support certain export related activities. There are certain restrictions on the use of proceeds of facilities in the agriculture, fisheries and aquiculture, and road freight transport sectors for borrowers impacted by the Northern Ireland Protocol.

Please note, the following are not eligible under RLS:

Banks, Building Societies, Insurers and Reinsurers (excluding Insurance Brokers)
Public sector bodies
State-funded primary and secondary school

Submit a loan enquiry

We provide loans up to £250,000 under the RLS scheme. Our loans can be repaid over a 5 year term. To begin our loan process, please complete a short loan enquiry.

Once we receive your enquiry, an investment manager will contact you to progress your enquiry. Typically, the time from application to decision is 2-3 weeks. This is subject to the complexity of the loan and your timely submission of all required documentation. Your investment manager will be happy to discuss this in more detail.

You will need to provide certain documents when you apply for an RLS backed facility. These include:

A completed online application
6 months bank statements
Management accounts
Year end accounts
12 months cashflow forecast
A business plan

Please note: Our lending decisions are made by humans not algorithms. Decision-making on whether a business is eligible for RLS is fully delegated to us.

For early resettlement fees, please refer to Section (4) Repayments of our Terms of Engagement.

Business finance support

The British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cashflow and a list of independent advice services.

Legal notice

The Recovery Loan Scheme is managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA. Visit www.british-business-bank.co.uk/recovery-loan-scheme.