Recovery Loan Scheme Explained

5 February, 2021

Included in the March 2021 budget announcement was the Recovery Loan Scheme (RLS), which will replace the Bounce Back Loan. With applications now open, I thought I’d take a more detailed look at what it is, who’s eligible, and how you can access the funding.

The aim of the scheme is to help businesses of all sizes to recover from the pandemic by giving them access to loans and other financial help. For my clients and other small businesses who may have lost out significantly on income this past year, my recommendation would be to put this money towards managing your cash flow, sorting out your balance sheet and planning for future growth.

What funding is available?


Every business is eligible for up to £10million, however, this is at the discretion of the lender.

  • Between £1000 and £10m is available for invoice or asset finance
  • Between £25,000 to £1million is available for term loans or overdrafts
    The government guarantees 80% of the finance to the lender and as a borrower, you will be 100% liable to the debt.The RLS is being lent on standard commercial banking terms, meaning that businesses will need to pay arrangement fees and repay loans with interest from the outset, but it has been agreed that the annual interest rates and other fees cannot be more than 14.99%.Under the scheme, lenders won’t take any personal guarantee for up to £250,000. But if you are looking to borrow more than that amount, the lender has the discretion to take personal guarantees if they feel it is necessary.However:
  • 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.Who is eligible?Businesses of all sizes and ages can apply for a loan but below are the government-listed eligibility criteria.You can apply for a loan if your business:
  • Is trading in the UKYou need to show that your business:
  • Would be viable were it not for the pandemic
  • Has been adversely impacted by the pandemic
  • Has a viable business proposition
  • Is not in collective insolvency proceedings (unless your business is in scope of the Northern Ireland Protocol in which case different eligibility rules may apply)Businesses that received support under the earlier COVID-19 guaranteed loan schemes are still eligible to access finance under this scheme if they meet all other eligibility criteria.What a lender will need from youWhen you apply for finance your lenders will need you to provide evidence that you will be able to pay the full amount back within your lean terms. The evidence requested may include:
  • Management accounts – cash flow and balance sheet
  • Business plan – your recovery strategy going forward
  • Historic accounts
  • Details of assetsLenders will also be required to undertake credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants.How long is the loan for?The loan length depends on which option of finance you have applied for and how much you’ve borrowed but the current terms look like:
  • 3 years for overdrafts and invoice financing
  • 6 years for loans and asset financeWhen does the scheme close?The current RLS is set to close on December 31st, but why wait? Get your application in now to start rebuilding as soon as you can. How do I apply? There are a number of RLS accredited lenders and some may give you better terms than others so I would always suggest shopping around. It is also important to note that if one lender turns you down you can still approach other lenders involved in the scheme.The best way to find an accredited lender is to go through the British Business Banks website which can be found here.

    How Auria can help

    As a business owner, one of the most important things you can do when applying for any financial help is to have your accounts and paperwork in order. In fact, I think I mention it every week, but financial organisation really is the backbone to every successful business. Without clear financial records, lenders won’t accept your application.

    That’s where Auria can help. Although we are accountants we are much more than that. We’re business advisors, here every step of the way on your business growth journey – and helping you with your financial statements is just one of the many things we can do for you.

    If you need help sorting out your business’s financial statements before applying for the RLS loan, why not drop us an email at or give us a call 020 7291 1000 and let us help you.

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