The government’s new recovery loan scheme, announced by the chancellor on 3 March 2021.
UK Businesses can apply for loans between £25,000 and £10m and a government guarantee for lenders is included in this initiative.
Businesses have to pay interest (and fees) from day one under the Recovery Loan Scheme because the British Business Bank will no longer pay interest and fees for the first 12 months.
There is no turnover restriction under the Recovery Loan Scheme, but the maximum loan amount is now capped at £10m.
A business can apply for finance under the Recovery Loan Scheme (RLS) even if it has already borrowed under BBLS, CBILS or CLBILS.
Eligibility Criteria
Be a UK trading company that generates more than 50% of its turnover from trading activity
Be viable (or would be viable were it not for the pandemic)
Have been impacted by the coronavirus pandemic
Not be in collective insolvency proceedings
If a lender can offer finance on normal commercial terms without the need to make use of the scheme, they may do so
Lenders are required to undertake credit and fraud checks for all applicants
Lenders will not take personal guarantees on facilities up to £250,000.
Lenders cannot take a borrower’s principal private residence as security.
Limit of Borrowing
Borrow between £25,001 and £10m (per business) for term loans and overdrafts.
Borrow from £1,000 to £10m (per business) for invoice finance and asset finance.
Government Guarantee
The Recovery Loan Scheme operates in a similar way to the previous support measures.
With the government giving lenders an 80% guarantee.
