What is the Recovery Loan Scheme?

The Recovery Loan Scheme (RLS) was originally launched by the UK Government on 6^th April 2021 and helps businesses access loans and other kinds of finance so they can recover after the COVID-19 pandemic and transition period. Applications for the scheme were open until 31^st December 2021. We are now in the 3^rd iteration of the RLS.

Announced in the Spring 24 budget, from June 2024, the RSL will be rebranded as The Growth Guarantee Scheme (GGS) running until 31^st March 2026.

The terms of the scheme will remain unchanged, ensuring continuity and consistency for lenders and the business community. By providing a 70% guarantee to participating lenders on finance of up to £2 million offered to smaller businesses, the scheme is expected to support 11,000 businesses during the next phase of recovery and growth.

A government recovery loan could help you in ways such as accessing cash flow, purchasing new equipment, invest in marketing and ultimately grow your business. This scheme replaces the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS). If you have previously accessed these schemes, you may still be eligible for the RLS/GGS.

As this is a government backed loan, the government will guarantee 70% of the finance to the lender, however as the borrower you are always 100% liable for the debt.

Approximately 80% of facilities under the third iteration of the scheme have been offered outside of London, and more than 90% of the businesses supported had fewer than 50 employees.

How much can you borrow on the Recovery Loan Scheme?

The RLS/GGS comes in four different forms: term loans, overdrafts, invoice, and asset finance. Depending on which type of facility you wish to access, there are different terms to the agreement. The terms will also change depending on which finance provider you use. If you are unsure of which provider to use, please get in touch and we can help you explore your options.

You could borrow:

• Term loans and overdrafts: between £25,001 and £2 million per business group
• Invoice or asset finance: between £1,000 and £2 million per business group

How long is the loan for?

The maximum length of the facility also depends on the type of finance you apply for:

• Up to 6 years for loans and asset finance facilities.
• Up to 3 years for overdrafts and invoice finance facilities.

 

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

Who is eligible for the RLS/GGS?

You can apply for a loan if your business:

• 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), including sole traders (min £25,001 loan)
• UK-based: You must be trading a in the UK and, for most businesses, generating more than 50% of its income from trading activity.
• Viability test: The lender must consider that the borrower has a viable business proposition
• The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings.

Subsidy limits: You’ll need to provide the lender with information regarding any loans you’ve already taken relating to covid bounce back loans as these will taken into consideration during the application

Businesses from any sector can apply except for:

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

Why Asset Funder?

If you are looking to access the government initiatives, then Asset Funder is here to help. Using a finance brokerage can have great benefits when accessing funding due to our expertise. With different finance providers offering different terms, we can work to ensure you have access to the best rates for your business. Although you may be eligible for the RLS, you may also be eligible for commercial loans which may have better terms. We have helped many companies access the CBILS and BBLS and we are excited to help you use the RLS to recover and grow your business too.

How to apply for the Recovery Loan Scheme

As an RLS-accredited brokerage, we can handle the application process for you, and you could even receive a decision within the same day. Please register your interest by clicking the button below.  A member of our team will be in touch for a no-obligation chat about your funding requirements.