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Chancellor of the Exchequer Rishi Sunak leaves 11 Downing Street to announce his Budget. 10 Downing Street.

Recovery Loan Scheme lands a week before economy reopens


Recovery Loan Scheme went live today, replacing CBILS, CLBILS and BBLS. Maddy Christopher shares details provided by the British Business Bank.

6th Apr 2021
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Recovery Loan Scheme (RLS) has gone live today – a month after being announced as the replacement for CBILS, CLBILS and BBLS in March’s Budget.

The new loan scheme coincides with further easing of Covid restrictions being announced – a week before outdoor pubs, shops, gyms and hairdressers are set to reopen on 12 April. Outdoor hospitality, theatres, cinemas and museums will reopen 17 May. 

Administered by the British Business Bank (BBB), the scheme will run until 31 December, subject to review, with loans available through a ‘diverse network of accredited commercial lenders’ (GOV.UK). 

“As we safely reopen parts of our economy, our new Recovery Loan Scheme will ensure that businesses continue to have access to the finance they need as we move out of this crisis,” said Chancellor Rishi Sunak.

British Business Bank provides further details

According to the BBB, the RLS provides a ‘wide range of product’. Businesses can choose from term loans, overdrafts, asset finance and invoice finance – subject to the lender being accredited for each of these finance types.

Term loans and asset finance facilities are available from three months up to six years, with overdrafts and invoice finance available from three months up to three years.

The scheme offers an additional loan on top of previous support schemes. Businesses that have taken out a CBILS, CLBILS or BBLS can still take out a Recovery Loan Scheme. However, the amounts borrowed under these have schemes could limit the amount they may borrow under RLS. 

Interest rates are capped at 14.99% with ministers are urging lenders to restrict rates to ensure business owners pay less than the ceiling figure. Interest and fees are to be paid by the business from the outset as businesses are required to meet the costs of interest payments and any fees associated with the scheme.

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 but all Recovery Loan Scheme-backed facilities are provided at the discretion of the lender.

“It’s vital support remains as restrictions relax and demand returns to normal, allowing businesses to recover, save jobs, and support for reopening,” said CBI chief economist Rain Newton-Smith.

Lenders are required to undertake credit and fraud checks for all applicants, as well as customary checks such as Know Your Customer and Anti-Money Laundering. The checks and approach may vary between lenders and the borrower will be 100% liable for the debt.

How to apply

Currently, only lenders previously accredited to provide CBILS have been invited to apply for accreditation for the Recovery Loan Scheme. Once accredited, lenders under the scheme are listed on the British Business Bank website.

So far, there are only 18 accredited lenders listed on the BBB’s website, despite GOV.UK stating “26 lenders have already been accredited for day one of the scheme, with more to come shortly”. 

All of the UK’s big four banks are included, but only one fintech: OakNorth Bank.

According to the BBB, ‘businesses should approach their own finance provider – ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.’

The BBB also advises lenders to offer borrowers the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, where possible.

“The launch of our new Recovery Loan Scheme will provide businesses with a firm foundation on which to plan ahead, protect jobs and prepare for a safe reopening as we build back better from the pandemic,” said business secretary Kwasi Kwarteng.

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