The Recovery Loan Scheme for businesses affected by pandemic

recovery loan scheme

Launched in April 2021, the Recovery Loan Scheme provides financial support to businesses across the UK following the disruption of the coronavirus pandemic.

What is the Recovery Loan Scheme?

The Recovery Loan Scheme is designed to help businesses of any size to access loans and other kinds of finance, so that they can recover from the pandemic. Loans of up to £10 million can be obtained for a variety of business purposes, including managing your cash flow, investment and funding growth. The loans are available through a number of lenders accredited by the British Business Bank and can be found on the British Bank website. The scheme is open until 31st December 2021, but this is subject to review. 

What types of loans are available?

The accredited lenders can provide term loans, overdrafts, invoice finance and asset finance of up to £10 million. The Recovery Loan Scheme gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you will always 100% liable for the debt.

If you are borrowing £250,000 or less, you will not be required to provide any form of personal guarantee. If you are borrowing more than £250,000 your lender will have the discretion to decide on whether to take a personal guarantee. However, your Principle Private Residence cannot be taken as security and the maximum amount that can be covered under the scheme is capped at 20% of outstanding balance of the Recovery Loan Scheme facility after the proceeds of the business assets have been applied.

How long are the loans?

The length of the loan will depend of the type of finance that you have applied for. Overdrafts and invoice finance facilities will be available for up to 3 years, whilst loans and asset finance facilities can be available for up to 6 years.

Are you eligible if you have already borrowed using other COVID-19 guaranteed loan schemes?

If you have already received support from the earlier coronavirus guaranteed loan schemes such as the Coronavirus Business Interruption Scheme and the Business Bounce Back Scheme, you can still access further finance using the Recovery Loan Scheme if you meet all the other eligibility criteria. However, the amount that you have borrowed previously, might affect the amount you can now borrow under the Recovery Loan Scheme. 

How do you apply?

Chose a provider from the list of accredited lenders on the British Bank website. These lenders offer different types of finance and amounts – so do check which lender will best suit your requirements. The facility is provided at the discretion of the lender. But remember to also check with your existing banking providers to see whether they can provide you with a loan on more favourable terms.

You will need to demonstrate that your business has been adversely affected by the pandemic, is not in collective insolvency proceedings and has a viable business proposition going forward.

Your lender will need evidence that you can afford to pay back the Recovery Loan Scheme backed facility – this could be your business plan, your management accounts, your historic accounts and your assets.

If you would like to discuss the Recovery Loan Scheme and other options available to your business, please do get in touch with the team at DRG Chartered Accountants. We would be very pleased to hear from you. 

For further information Website
Recovery Loan Scheme

British Business Bank Website

Recovery Loan Scheme – How it works
Recovery Loan Scheme – How to apply
Recovery Loan Scheme – FAQs
Recovery Loan Scheme – Current accredited lenders

DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication. 

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