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11 March 2021 | Comment | Article by Dominic Marshall

What you need to know about the Recovery Loan Scheme

As part of the Budget 2021, the government announced the Recovery Loan Scheme which is aimed at helping businesses restart and recover from the COVID-19 pandemic.

If you want to know what the Recovery Loan Scheme means for you, we’ve summarised the key details of the scheme (as released so far) in this short article.

What is the Recovery Loan Scheme (RLS)?

The is set to replace the existing coronavirus finance support schemes (the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Bounce Back Loan Scheme (BBLS)). The scheme will run from 6 April 2021 until 31 December 2021, subject to review. The existing CBILS closes for applications at the end of March 2021 and so this will be seen as a welcomed replacement for many businesses which have struggled as a result of the pandemic.

Overview of the Recovery Loan Scheme

The maximum value of a facility provided will be £10 million per business and once received, the finance can be used for any legitimate business purpose, including growth and investment. The government guarantees 80% of the finance to the lender.

The main difference with the RLS to the existing COVID-19 schemes is that there are no turnover restrictions: businesses of any size can apply for finance under the RLS, the maximum loan amount available to each business is £10,000,000.

Another difference between the RLS and existing COVID-19 financial support schemes, is to do with interest and fees that are payable on the loan. The British Business Bank will no longer pay the borrower’s interest and fees for the first 12 months. This means the borrower will have to pay the interest themselves from day one.

No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.

Types of finance available

Term loans and overdrafts will be available between £25,001 and £10,000,000 per business.

Invoice finance and asset finance will be available between £1,000 and £10,000,000 per business.

The term of the loans will be as follows:

  • Up to six years for term loans and asset finance facilities.
  • Up to three years for overdrafts and invoice finance facilities.

Eligibility criteria for Recovery Loan Scheme

You will be able to apply for a loan if your business:

  • is trading in the UK

You will need to show that your business:

  • is viable or would be viable were it not for the pandemic;
  • has been impacted by the coronavirus pandemic; and
  • is not in collective insolvency proceedings.

Businesses which have taken out a CBILS, CLBILS or BBLS facility previously will be able to access the new scheme, although the maximum they will be allowed to borrow will depend on the individual lender’s assessment and scheme requirements. The approach may vary between lenders but all businesses will have to meet all other eligibility criteria.

Who will offer these loans?

A list of accredited lenders has not yet been made available. However, there are a number of major banks that have already signed up to the scheme. We will be keeping a close watch for the details of the accredited lenders which will be released in the coming weeks and update this page when they are confirmed.

How Hugh James can help you with the Recovery Loan Scheme

Our expert banking team is continuing to assist many of our client’s through the COVID-19 crisis.

We will be keeping an eye out for further details from the government on the Recovery Loan Scheme over the coming months in order to keep you up to date with any developments.

If you are looking to take out a loan using the Recovery Loan Scheme and need some advice, please do not hesitate to contact us.

Author bio

Dominic Marshall


Dominic is a partner and head of the banking and finance team. Dominic is a vastly experienced banking and finance lawyer who, since joining Hugh James in 2010 has grown and developed the banking team into a leading player, acting for high street banks, challenger banks, financial institutions and building societies.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.


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