Covid 19 Recovery Loan Scheme for Businesses

In the budget 2021, Chancellor Rishi Sunak launched a new government-backed loan scheme named Recovery Loan Scheme (RLS) for businesses, replacing the existing bounce back loan scheme and the Coronavirus business interruption loan scheme. The main purpose of this scheme is to support UK businesses that have been adversely affected by the coronavirus pandemic. This new recovery loan scheme comes as a huge relief for the severely impacted firms. This loan can be used in conjunction with the existing covid loan schemes and is provided to help businesses refinance, restructure and expand.

Covid 19 Recovery Loan Scheme for Businesses
In this article we cover:

What is Covid 19 Recovery Loan Scheme for businesses?

The Recovery Loan Scheme is designed to assist businesses of all sizes in obtaining loans and other forms of financing to recover from the pandemic. Each business can receive up to £10 million in funding. The actual amount and terms offered are at the discretion of the participating lenders. As per this new loan scheme, the government guarantees 80% of the finance to participate lenders to encourage them to make loans available to businesses.

This recovery loan scheme allows businesses to apply for a loan ranging from £25,000 to £10 million. In case any business is not capable of returning its debts, 80% of the amount will be paid by the government. The annual borrowing costs, including upfront fees, is capped at 14.99%, though the government expects this to be much lower in the "vast majority of cases."

Just keep in mind that youll have to pay any interest and fees yourself right away (unlike with the Bounce Back Loan Scheme).

Eligibility Criteria for the Recovery Loan Scheme

A business owner can apply for the Recovery Loan Scheme if –

  1. They have a business and trading in the UK.
  2. They’re able to show that business has been adversely affected by the Covid-19 pandemic.
  3. The business is viable or would be viable were it not for the pandemic
  4. Business is not in collective insolvency proceedings.

Note – If you have already borrowed from other loans schemes earlier such as the bounce back loan scheme, the coronavirus business interruption loan scheme, the coronavirus large business interruption loan scheme, you can still apply for the RLS.

Who cannot apply for Recovery Loan Scheme?

Businesses from any sector can apply for this new scheme, except the following –

  1. Banks and building societies
  2. Insurers and reinsurers (not insurance brokers)
  3. State-funded primary and secondary schools
  4. Public-sector bodies

What will you get in Recovery Loan Scheme?

You will get financial support from the UK government in the following –

  1. Term loans or overdrafts ranging from £25,001 to £10 million per business
  2. Invoice or asset financing ranging from £1,000 to £10 million per business

Personal guarantees are not required on loans up to £250,000, and the borrowers principal private residence cannot be taken as security.

Types of Finance

A lender can provide up to £10 million in financing through one of the following options –

  1. Term loan
  2. Overdraft facility
  3. Asset finance
  4. Invoice finance

Tenure of the Loan

The maximum length of the loan facility will be determined by the type of finance the business applies for and will be as follows -

  1. Up to 6 years (term loans and asset finance)
  2. Up to 3 years (overdrafts and invoice finance)

How to apply for Recovery Loan Scheme?

Businesses can apply for the RLS through the accredited lenders listed on the British Business Bank website. Not every accredited lender can provide you with all the listed types of financing. Find the current accredited lender that is right for you by clicking here.

DNS Accountants are here to provide you with the assistance and advice you need to apply for the loans. Whether you are experiencing cash flow issues, considering additional funding, or are unsure whether your business is still viable, we assure you that we will take you in the right direction and help you accomplish your business goals.

In case you have any query or want specialist advice on "Recovery Loan Scheme", kindly call us on 03330886686, or you can e-mail us at enquiry@dnsaccountants.co.uk

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About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

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About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.


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