The Recovery Loan Scheme (RLS) launched on 6 April 2021 and supports access to finance for UK businesses as they recover and grow following the Covid-19 pandemic.
RLS aims to help businesses affected by Covid-19 and can be used for business purposes, including, managing cashflow, investment and growth. It is designed to support businesses that can afford to take out additional finance for these purposes. Businesses who have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme. The Scheme will run until 31 December 2021, subject to review. We aim to offer this service from the end of April.
Scheme features include:
Up to £10m facility per business
The maximum amount of a facility provided under the scheme is £10m per business (maximum £30m per group). Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
Term loans and asset finance facilities are available from three months, for up to six years, with overdrafts and invoice finance available from three months, for up to three years.
Interest and fees to be paid by the borrower from the outset
Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
Access to multiple Covid-19 schemes
Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS.
Personal guarantees are not permitted for facilities of £250,000 or less. Above £250,000 the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied. No personal guarantees can be held over Principal Private Residences.
Guarantee to the Lender
The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility. The borrower always remains 100% liable for the debt.
The borrower must confirm to the lender that it has been impacted by Covid-19.
The borrower must be carrying out trading activity in the UK.
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.
Credit and fraud checks for all applicants
Lenders will be required to undertake credit and fraud checks for all applicants. The checks and approach may vary between lenders.
Existing Arbuthnot Latham clients have priority to facilities, however new applicants may be considered.
There is no turnover restriction for businesses accessing the scheme.
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 schools
How to apply
If your business has been impacted and you meet the eligibility criteria, please email us at RLS@arbuthnot.co.uk to discuss how we can help you.
You will need to provide certain documents when you apply for an RLS-backed facility. These are likely to include:
- Management accounts
- A business plan
- Historic accounts
- Details of assets
Decision-making on whether a business is eligible for RLS is fully delegated to the British Business Bank’s accredited RLS lenders.
*Arbuthnot Latham typically support clients with a turnover equal to or greater than £1m and /or borrowing requirements equal or greater than £1m.
If you are a client of Arbuthnot Commercial Asset Based Lending, please visit their page on RLS loans for more information.
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.
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.