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What is the Recovery Loan Scheme?

14th May 2021

One of the many support schemes put in place by the government to aid business revival, the Recovery Loan Scheme is available to companies of all sizes which have been impacted by the pandemic.

The scheme was announced in early March and launched on the 6th of April to replace the expired Coronavirus Business Interruption Loan and Bounce Back Loan schemes.

These original initiatives offered a 12-month interest-free period, though the most recent iteration of this support does not.  

Applications for the scheme are currently open until the 31st December 2021, subject to review.

Through the measure, businesses can apply to receive any amount of financing from £1,000 as an asset or invoice finance, or from £25,001 as an overdraft or term loan, at the discretion of the lender. A maximum of £10 million per individual business or £30 million per business group can be secured and these can be agreed for a period of up to 3 years for the asset or invoice, or 6 years for the overdraft.

Moreover, the annual effective rate of interest, upfront fee and other fees across the loan term cannot be more than 14.99%.

Unlike regular business loans, the government have guaranteed up to 80% of debts due to be repaid to the lender.

To qualify for the Recovery Loan Scheme, businesses from any sector must prove they have been impacted financially by the trading constraints the pandemic has presented. Additionally, businesses that have already borrowed through a Bounce Back Loan or Coronavirus Business Interruption Loan are still permitted to apply. However, this will be factored into the amount that can be borrowed in the new loan. 

Firms in the public sector, banks, building societies and state-funded schools are ineligible for the scheme.

Recovery Loans can be secured through a number of government approved lenders:

  • Aldermore
  • Arbuthnot Latham
  • Bank of Scotland
  • Barclays
  • Clydesdale Bank
  • Danske Bank
  • HSBC UK
  • Lloyds Bank
  • NatWest
  • OakNorth Bank
  • Paragon Bank
  • Santander
  • Secure Trust Bank
  • Skipton Business Finance
  • Royal Bank of Scotland
  • Ulster Bank
  • Yorkshire Bank

Businesses who wish to apply can go straight to a lender, though they may opt to go through a broker following a credit check.

More information on how to apply for the Recovery Loan Scheme can be found here.

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