Recovery Loan Scheme
Discover the scheme’s features, eligibility criteria and how to apply.
Investec is an accredited lender for the Recovery Loan Scheme (RLS). The RLS was launched on 6 April 2021 to support access to finance for UK businesses as they recover and grow following the Covid-19 pandemic.
The RLS aims to help businesses affected by Covid-19 and can be used for business purposes, including managing cash flow, investment and growth. It is designed to support companies that can afford to take out additional finance for these purposes. Businesses that have taken out finance under the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or the Bank of England’s Covid Corporate Financing Facility (CCFF) can access the RLS. A key aim of the Recovery Loan Scheme is to improve the terms on offer to businesses, but if we can offer a business the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, we should do so.
At Autumn Budget 2021, the government announced that the Recovery Loan Scheme will be extended by six months to 30 June 2022.
From 1 January 2022, the following changes will come into force:
- The scheme will only be open to small and medium-sized enterprises (turnover <£45m)
- The maximum amount of finance available will be £2 million per business (maximum amount per Group limited to £6m)
- The guarantee coverage that the government will provide to lenders will be reduced to 70%
- These changes will apply to all offers made from 1 January 2022
Before checking your business is eligible, ensure you meet the following criteria
>£2 million EBITDA
Key scheme features
The maximum amount of a facility provided under the RLS is £2 million per business (maximum £6 million per group). Minimum facility sizes may vary between lenders, but for the scheme as a whole, they start at £1,000 for asset and invoice finance and £25,001 for term loans and overdrafts. Details on the types and sizes of finance that Investec offers under the RLS are below.
For the RLS as a whole, term loans and asset finance facilities are available from three months up to six years, and overdrafts and invoice finance are available from three months up to three years. Details on the types and lengths of finance that Investec offers under the RLS are below.
Borrowers are required to meet the costs of interest payments and any fees associated with the RLS facility from the outset.
Businesses that have taken out a CBILS, CLBILS, BBLS or CCFF facility can access the new scheme. However, the amount they have borrowed under a previous scheme may, in certain circumstances, limit the amount they may borrow under the RLS.
Personal guarantees cannot be taken as security for facilities of £250,000 or less. Above £250,000, the maximum amount that can be recovered from a guarantor under the RLS is capped at 20% of the outstanding balance of the RLS facility after the proceeds of all other available security have been applied.
No personal guarantees can be held over Principal Private Residences. The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility. The borrower always remains 100% liable for the debt.
What types and size of finance can Investec offer under the RLS?
Under the RLS, we offer:
- term loans from £250,000 to £2 million for between three months and six years
- revolving credit facilities from £250,000 up to £2 million for between three months and three years
- asset finance facilities from £50,000 to £2 million for between three years and six years.
Investec terms may vary according to individual circumstances and loan purpose. For term loans and revolving credit facilities, Investec requires the borrower to have an EBITDA greater than £2 million for the last financial year and to have a trading history of at least three years.
Minimum facility sizes and terms may vary between lenders. Details of other RLS accredited lenders can be found on the BBB website.
The borrower must confirm to the lender that it has been impacted by Covid-19.
The borrower must be carrying out trading activity in the UK.
The lender will consider that the borrower has a viable business proposition but may disregard any concerns over its short-to-medium term business performance due to the uncertainty and impact of Covid-19.
Lenders will be required to undertake credit and fraud checks for all applicants. The checks and approach may vary between lenders.
The scheme will only be open to small and medium-sized enterprises (turnover <£45m).
The borrow must have had earnings before interest, taxes, depreciation, and amortisation (EBITDA) greater than £2 million in the last financial year.
Please note: The following are not eligible under the RLS:
- banks, building societies, insurers and reinsurers (excluding insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools.
You will need to provide certain documents when you apply for an RLS-backed facility. These are likely to include:
- management accounts
- a business plan
- historic accounts
- details of assets.
Decision-making on whether a business is eligible for the RLS is fully delegated to the British Business Bank’s accredited RLS lenders.
If you meet all the eligibility criteria and wish to apply, the next step is to apply.
Business Finance Support
The British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cash flow and a list of independent advice services.
The Recovery Loan Scheme is managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA. Visit http://www.british-business-bank.co.uk/recovery-loan-scheme
Our UK regulator
Investec Bank plc (Reg. no. 489604) is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered at 30 Gresham Street, London EC2V 7QP.