The revamped RLS scheme took effect on 1 January 2022, with a lower maximum amount available to businesses (£2m) and a lower government guarantee (70%). You’ll find the changes summarised below. There are now more than 70 accredited lenders. In the Autumn Budget 2021, the government announced that the Recovery Loan Scheme will be extended by six months to 30 June 2022.
The new Recovery Loan Scheme (RLS) helps give UK businesses ongoing access to finance as they recover from the economic impact of the COVID-19 pandemic. The scheme can be used for any legitimate business purpose, including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.
Who can apply
Your business must:
- have been affected by Covid-19 – you’ll need to confirm to the lender that the coronavirus pandemic has had an impact on your ability to operate
- be carrying out trading activity in the UK
- have a viable business proposition – your lender may disregard (at its discretion) any concerns over your business’ performance over the short to medium term because of the uncertainty and impact of Covid-19
- have a turnover not exceeding £45m per annum
There is no restriction on turnover, meaning your business can access the scheme regardless of what amount of revenue it generates. When you apply to RLS, the lenders are required to carry out credit and fraud checks for your business. The type of checks, and how they’re done, may vary between lenders.
Key features of the scheme
| Up to £2m facility per business | Guarantee to the lender to encourage lending | Interest and fees to be paid by the business from the outset |
| The maximum amount of a facility provided under the scheme is £2m per business (maximum £6m per group). Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts. | 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. |
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%. |
| Term length | Personal guarantees | Turnover limit |
| 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 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. | The scheme will only be open to businesses with a turnover not exceeding £45m per annum. |