The new scheme will support borrowing of up to £10m for individual businesses and up to £30m across a group, and, once received, the funds can be used for any legitimate business purpose, including managing cashflow, growth and investment. It is designed to appeal to businesses that can afford to take out additional finance for these purposes. The British Business Bank, which will administer the scheme on behalf of the Government, played an important role during the pandemic, by administering the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS). The new Recovery Loan Scheme will continue to support smaller businesses as they steer a path towards a sustainable recovery.
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.
- Wide range of products: Businesses can choose from term loans, overdrafts, asset finance and invoice finance (subject to the lender being accredited for each of these finance types).
- Term length: Term loans and asset finance facilities are available from three months up to six years, with overdrafts and invoice finance available from three months up to three years.
- Interest and fees to be paid by the business from the outset: Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.
- Access to multiple 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.
- Pricing: The annual effective rate of interest and upfront and other fees cannot be more than 14.99%.
- 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.
- Recovery Loan Scheme-backed facilities are provided at the discretion of the lender.
- 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.
For full eligibility criteria and information on how to apply, please visit the
British Business Bank website.
