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.

A key aim of the Recovery Loan Scheme is to improve the terms on offer to businesses, but if a lender can offer a business the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.

At Autumn Budget 2021, the government announced that the Recovery Loan Scheme will be extended by six months to 30 June 2022, with changes applying to all offers made from the 1 January 2022.

 

Applications for RLS facilities are currently closed.

Scheme features include:

Up to £2m facility per business
The maximum amount of a facility provided under the scheme is £2m per business (maximum  £6m per group). Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.

Term length
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
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.

 

Eligibility Criteria

Covid-19 impact
The borrower must confirm to the lender that it has been impacted by Covid-19.

UK-based
The borrower must be carrying out trading activity in the UK.

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.

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.

Priority
Existing Arbuthnot Latham clients have priority to facilities, however new applicants may be considered.

Turnover limit*
 Businesses with a turnover not exceeding £45m per annum

 

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

Applications for RLS facilities are currently closed.

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.

Working with British Business Bank

Managing business debt: A guide for smaller businesses

It’s fair to say that the last 20 months have been challenging for everyone across the UK, small businesses and business owners included.

The severe impact of the Covid-19 pandemic sent many businesses into survival mode, where the priority was finding ways to overcome the enforced closures, the lockdowns and the financial hardship that the spread of coronavirus brought. For some businesses, this remains a priority.

While it’s true that survival is still on some businesses’ minds, others have been able to recover and can now look positively towards the future.

This guide has been designed to provide impartial information to help businesses through survival and onto recovery, helping them stabilise and move forward to growth and future success, focusing on the following areas:

  • Understanding debt finance
  • Managing debt
  • Improving your cash flow
  • Moving from survival to recovery and growth
  • Resources for businesses worried about their debt

The British Business Bank has produced the contents of this guide with contributions from Be the Business, an independent, not-for-profit organisation whose goal is to help business owners and leaders improve their businesses’ performance.

 

Brochure cover. Title: Manage your business debt, improve your cash flow and get set for growth. A guide for smaller businesses. From the British Business Bank.

Contacts

Garey Reyes
Commercial Banker

GareyReyes@arbuthnot.co.uk

+44 (0) 7909 256 476

Richard Winckles
Senior Commercial Banker

RichardWinckles@arbuthnot.co.uk

+44 (0) 7760 712 744