Recovery loan scheme (RLS) launches today

06 April 2021

The Recovery Loan Scheme (RLS) launches today.

The Recovery Loan Scheme (RLS) will run from 6th April 2021 until 31st December 2021 (subject to reviews), aimed at providing support to UK businesses as they look to recover from the coronavirus pandemic.

Your business can apply for the scheme if it has been affected by the coronavirus pandemic. If eligible, and successful in obtaining finance through the Recovery Loan Scheme (RLS), then you can use the funds for any legitimate business purpose.

However, you must be able to afford to take out additional debt finance, with each lenders being required to undertake standard credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants.

Each lender will then make their own assessment, some lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach vary between lenders.

What if I have borrowed under another coronavirus loan scheme?

Even if your business has already borrowed under either the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) or the Coronavirus Large Business Interruption Loan Scheme (CLBILS), you can still apply for finance through the Recovery Loan Scheme (RLS), although the amount they have borrowed under an existing scheme may in certain circumstances limit the amount they may borrow under the Recovery Loan Scheme (RLS).

Key features of the Recovery Loan Scheme (RLS)

  • 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.

  • Businesses are required to meet the costs of interest payments and any fees associated with the RLS facility.

    • The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%.

  • Terms

    • For term loans and asset finance facilities: from three months up to six years.

    • For overdrafts and invoice finance facilities: from three months up to three years.

  • Personal Guarantees

    • The lender has the discretion to decide whether to take personal guarantees, though:

    • 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.

  • There is no turnover restriction for businesses accessing the scheme.

Important | Please note:

  • The scheme gives the lender a government-backed guarantee against the outstanding balance of the facility.

  • As the borrower, you remain 100% liable for the debt.

  • Every application will be assessed on an individual basis and must show affordability and that the business is able to service the additional debt.

  • A key aim of the Recovery Loan Scheme (RLS) is to improve the terms on offer to you, but if a lender can offer you the choice of a commercial loan on better terms, without requiring the guarantee provided by the Recovery Loan Scheme (RLS), they should do so.

Type of finance available on the Recovery Loan Scheme (RLS)

  • Term loan

  • Asset finance

  • Invoice finance

  • Overdraft

Eligibility criteria for the Recovery Loan Scheme (RLS)

  • Has your business been impacted by coronavirus pandemic? – you will need to confirm to the lender that you have been impacted by the coronavirus pandemic.

  • Is your business carrying out trading activity in the UK?

  • Does your business have a viable business proposition – your lender may disregard (at its discretion) any concerns over short-term to medium-term business performance due to the uncertainty and impact of Covid-19.

If you answer yes to the above, then you are eligible to apply for finance under the Recovery Loan Scheme (RLS), subject to each lender’s own assessment.

Credit and fraud checks

Lenders will be required to undertake standard credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.

The following are not eligible under the Recovery Loan Scheme (RLS):

  • Banks, building societies, insurers and reinsurers (excluding insurance brokers)

  • Public-sector bodies

  • State-funded primary and secondary schools

What information will I need to make an application for the Recovery Loan Scheme (RLS)?

When you apply for finance through the Recovery Loan Scheme (RLS), you will need to provide certain information and evidence to show that you can afford to repay the facility. This can include, but is not limited to:

  • Historic detailed accounts

  • Latest management information

  • Asset details

  • Application form

Each accredited lender will decide on if a business is eligible for the Recovery Loan Scheme (RLS).

How do I apply?

You should approach your own finance provider in the first instance.

Though if you are unable to secure finance through them, then you should consider contacting us to see how our accredited lenders can assist.

Not every accredited lender can provide every type of finance available under Recovery Loan Scheme (RLS), with the amount of finance offered varying from lender to lender.

At www.thefundingstore.co.uk we have a panel of lenders who offer business loans, asset finance and invoice finance, so if you want to see what options are open to your business, then contact us today on 01908 880420.

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This article has been produced by www.TheFundingStore.co.uk for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of the information contained in this article is accepted by HPG Holdings Ltd. In all cases appropriate professional legal and financial advice should be sought before making a decision.

This article has been produced by www.TheFundingStore.co.uk for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of the information contained in this article is accepted by HPG Holdings Ltd. In all cases appropriate professional legal and financial advice should be sought before making a decision.