Recovery Loans

The Recovery Loan Scheme (RLS) is a government backed loan scheme designed to help businesses recover from the Covid-19 pandemic and start reinvesting. In essence, it is a way of possibly turning a "no" from a business lender into a "yes".

The Recovery Loan Scheme is run by the British Business Bank (BBB) on behalf of the government and works by providing the lender with a guarantee of 70% of the outstanding debt in the event that the borrower defaults.

The purpose is to help those small and medium sized businesses that are viable and considered a good credit risk, but don't have enough security to back the finance they need to grow back. In this case, the lender can ask the British Business Bank for a guarantee.

Recovery Loans are available on term loans, working capital, asset finance and invoice finance products from £1,000 to £2m and on terms from three months to six years

There are a few important things to remember:

• The BBB is providing the guarantee to the lender, not to you
• You will remain liable to the lender for the full amount of outstanding capital. In the event of default, only after the lender has pursued all other avenues, can it turn to the government guarantee.
• You are likely to be asked for a directors' guarantee in addition to the government's guarantee. The lender cannot, however, ask you to pledge your principal home in support of it
• If you have, or have had in the past, a CBILS or Bounceback Loan, you can still apply for another loan under the RLS.

To be eligible you must be:

• Trading in the UK
• Viable, or viable were it not for the pandemic
• Not subject to insolvency proceedings

As we have mentioned in our blogs, the RLS is currently under-utilised and often not offered by accredited lenders who prefer to lend on their own commercial terms. We've come across situations where, with our intervention, a RLS guarantee has been applied for and agreed in the best interests of the customer.

If you think you have a sound borrowing proposal, but inadequate security to support it, ask us about the Recovery Loan Scheme. We can explain it to you and then support you with the completion of your application.

We've created the following video to answer some of your frequently asked questions about Recovery Loans