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Government Recovery Loan Scheme

Extended - But what are the changes and what does this mean? Following the coronavirus pandemic, the government introduced the Recovery Loan Scheme (RLS) on the 6th April 2021 to help support all sizes of business to access funding to incentivise recovery and growth. As part of the UK Govt's autumn budget announcement, Rishi Sunak has extended the scheme (previously due to end on 31/12/2021), The extension now means the scheme will be live until end June 2022. However he also announced some important changes to the scheme which are likely to have an impact on both the number of lenders in the scheme and the appetite the lenders have to lend under the scheme. What has changed and what does this mean? At Autumn Budget 2021, the Chancellor announced that the Recovery Loan Scheme would be extended until 30 June 2022. From 1 January 2022, the following changes will come into force:

  • The scheme will only be open to small and medium sized enterprises

Scheme will no longer be available to businesses / groups with annual turnover in excess of £45m - this is likely to have little impact as demand here has been limited. Under the previous CLBILS scheme there were only 753 CLBILS loans approved.

  • The maximum amount of finance available will be £2 million per business

Currently businesses can apply for up to 25% of their annual turnover to a max facility size of £10m. The changes will see businesses with turnover in excess of £8m capped at £2m. Whilst the average CBILS Loan was around £240k there were a large number of loans / facilities in excess of £2m so this could be a significant change to the scheme.

  • The guarantee coverage that the government will provide to lenders will be reduced to 70%

The guarantee from the government (currently 80% and reducing to 70% from Jan) is there for the benefit of the lender - the borrower remains responsible for 100% of the facilities. For loans under £250k there is no personal guarantee required for the loans and this important feature remains post January. However it is likely that this (reduction of the govt guarantee to 70%) will have an impact on the risk appetite of lenders under the scheme. In plain English, the lower guarantee will likely have the effect of making it more difficult to get approval for a loan under the scheme. Additionally, where this change will have an impact on the lenders risk profiling, this could also result in an increased cost to the customer. The max annual effective rate of interest, upfront fee and other fees cannot be more than 14.99% These changes will apply to all offers made from 1 January 2022. Short for time? Read the infographic below - Details of the current scheme:

Want the ultimate guide? Keep reading... What is the recovery loan scheme? The RLS with it's current rules is set to run to the 31st of December 2021 and can be used for any purpose you see fit for your business including investment in assets, marketing and as a cash flow solution. Your business's finance will be assessed to see if you can afford the debt and the stronger your financial profile the more competitive terms you will be offered. Who is eligible for the scheme? Your UK trading business must have been adversely impacted by the pandemic (which I believe almost every business will be able to argue) and still be viable had it not been for the pandemic. Your business will must also not be undergoing collective insolvency proceedings. You are still eligible if you have already received other government coronavirus support loans, however, some lenders have set a maximum amount available, made up of the total you have borrowed against all the schemes:


  1. Coronavirus Business Interruption Loan Scheme (CBILS)

  2. Coronavirus Large Business Interruption Loan Scheme (CLBILS)

  3. Bounce Back Loan Scheme (BBLS)

  4. Recovery Loan Scheme (RLS)

How it works Types of finance available

  • Invoice Finance (Find out more here)

  • Asset Finance (Find out more here)

  • Term Loan

  • Overdraft facility

Who's giving the finance? Lender's are able to sign up to provide through the recovery loan scheme and become accredited by the British Business Bank. High street banks were some of the first to offer funding for the RLS but other lender's have started to become available and seem to have slightly more appetite. To can see a full list of lenders available here. What can I get?

  • Invoice or asset finance solutions from £1000 to £10 million

  • Term loans or overdrafts from £25,001 to £10 million

For how long? The length of the facility is dependant on the type of finance solution you are adopting:

  • up to 6 years for loans and asset finance facilities

  • up to 3 years for overdrafts and invoice finance facilities

Security and guarantee's The loan is secured 80% by the government for the lender. How do I apply? Contact us today here or call us on 01392 241669 Other useful information

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