Recovery Loan Scheme (RLS)

The scheme launched on 6 April 2021 and will remain open until 31 December 2021, subject to review.

RLS aims to help businesses of any size across the UK affected by Covid-19, providing support to recover and grow following the disruption of the pandemic.

It is designed to appeal to businesses that can afford to take out additional debt finance and can be used for any legitimate business purpose, including managing cashflow, investment and growth.

RLS guarantees a wide range of products, covering term loans, overdrafts, asset finance and invoice finance facilities. Businesses can borrow up to a maximum of £10m, available on repayment terms up to six years (for term loans and asset finance) and up to three years (for overdrafts and invoice finance facilities).

Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.

Businesses will be required to meet the costs of interest payments and any fees associated with the facility from the outset.

Lenders will be required to undertake standard credit, fraud, anti-money laundering and Know Your Customer checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.

The scheme provides the lender with a government-backed 80% guarantee against the outstanding balance of the facility. The business remains 100% liable for repayment of the facility.

A business with an existing facility under either the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) or the Coronavirus Large Business Interruption Loan Scheme (CLBILS) can still access the new scheme, provided it is eligible and with total borrowing subject to a lender’s assessment of affordability.

A list of the current accredited lenders offering this scheme and further details of the eligibility criteria and FAQs from the British Business Bank are available.

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Start Up Loans

A new government-backed loan scheme for start-up businesses and recently started businesses (up to 24 months) is currently available. Key features of the scheme are:

  • borrow up to £25,000
  • fixed interest rate of 6% per annum
  • one-to-five-year repayment term
  • no setup or early repayment fees
  • 12 months of free mentoring
  • pre-loan support with business plans and cashflow forecasts
  • a range of useful templates and start up guides
  • exclusive discounts on business products from O2, Experian, Intuit and 30+ more

In addition, Start Up Loans has partnered with the Open University to offer a range of free courses ideal for people who are going into business for the first time. The courses cover subjects such as:

  • entrepreneurship
  • career and leadership
  • finance and accounting
  • marketing and commercial awareness
  • project management

Further details and applications can be accessed at Start Up Loan's website.

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Previous financial assistance measures made available

Loans under the Coronavirus Business Interruption Loan Scheme (CBILS)

Applications for the CBILS scheme 2020 closed for new applications on 31 March 2021.

The scheme was initially intended to run for six months and was subsequently extended to 31 March 2021. Following further

All SMEs in all industries (except for the exclusions below) could apply. 

Applications had to be made directly to lenders accredited by the British Business Bank. The lender had the authority to decide whether to offer finance under this scheme unless it could do so on normal commercial terms. Other lenders could be approached if one lender turned the lending down. Crucial relaxations were applied so that insufficient security was not a condition to access the scheme.

SMEs qualified if the business:

  • was UK-based
  • had an annual turnover under £45m 
  • had a borrowing proposal that the lender would consider viable prior to the Covid-19 pandemic 
  • self-certifed that it had been adversely impacted by Covid-10
  • was not classed as a ‘business in difficulty’ on 31 December 2019, if applying to borrow £30,000 or more.

Applications could be made directly to the bank and there were no arrangement fees. The government paid for any lender-levied fees and covered interest payments for the first 12 months, lowering the initial repayments for smaller businesses. In addition, some lenders offered capital deferment schemes of up to six months.

Term loans from £10,000 to £5m were available for a maximum repayment period of six years. Overdraft and invoice financing to ease working capital requirements were available for up to three years. 

Under the expanded scheme, borrowings of up to £250,000 could be accessed without any security. For borrowings above £250,000, personal guarantees and security were required, at the lender’s discretion. Principal private residences could be taken as security or used to support personal guarantees.

As the government backed these loans with an 80% guarantee to the lenders, the recoveries on defaulted loans were limited to 20% of the outstanding balance on the facility, after the proceeds of any business assets offered as security have been applied.

Lenders required the following information:

  • the amount to be borrowed
  • the purpose of the loan, so that the lender could assess which type of finance was right
  • repayment term so that the bank could verify affordability. 

The following documentation was likely to be requested as supporting evidence (although this may have varied):

  • management accounts
  • cashflow forecast
  • business plan
  • historic accounts
  • details of assets.

* Excluded businesses that could apply for CBILS were:

  • public-sector bodies
  • further-education establishments, if they are grant-funded
  • state-funded primary and secondary schools.

Find out more about the scheme rules and eligibility criteria

Package of additional funding measures for companies unable to access CBILS

Additional funding of a £1.25bn coronavirus package to protect firms driving innovation in the UK was delivered under two new schemes:

  • a package that included a £500m investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector (Future Fund Loan Scheme)
  • SMEs focusing on research and development also benefited from £750m of grants and loans.

Future Fund Loan Scheme

Applications for new loans under the Future Fund Loan Scheme closed on 31 January 2021. From May 2020, UK companies affected by the pandemic but unable to access the CBILS could apply for a new Future Fund government bridging loan subject to eligibility criteria.

The scheme was delivered in partnership with the British Business Bank and will launch in May 2020. More details can be found here.

As part of the scheme, the government issued a convertible bridging loan amounting to 50% of total funds raised by the company – the other 50% would come from private investor funding. Application had to be made for at least £125,000 and no more than £5m. The bridging loan was converted to equity at 20% discount. 

The bridge funding had to be used solely for working capital purposes and could not be used by the company to repay any borrowings, make any dividends or bonus payments to staff, management, shareholders or consultants, or, in respect of the government loan, to pay any advisory or placement fees or bonuses to external advisers.

The scheme was open from May 2020 until 31 January 2021.

Qualifying companies

  • unlisted UK registered companies
  • which raised at least £250,000 of private funding in the last five years
  • which have a substantive economic presence in the UK
  • for group companies only the parent company could apply.

Micro businesses: Bounce Back Loan scheme 

Applications for new loans and top-ups closed on 31 March 2021.

This scheme was available for eligible micro businesses from 4 May 2020 through an online application. Businesses could apply for loans from £2,000  to £50,000.

On 24 September 2020 the repayment terms were relaxed as follows:

  • Loan is repayable within 10 years under a 'pay-as-you-grow' initiative (original terms of repayment were five years, extended to 10 years on 24 September 2020)
  • Businesses have the option to move temporarily to interest-only payments for up to six months (an option that they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).

Scheme terms:

  • The government will pay the interest on the loans for the first 12 months. No repayments will be due for the first 12 months.
  • The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
  • The scheme will provide lenders with a 100% government guarantee.
  • Applications can be for loans of up to 25% of turnover
  • Businesses eligible for a loan are those that:
    • are based in the UK
    • have been negatively affected by coronavirus
    • were not an ‘undertaking in difficulty’ on 31 December 2019
    • are not already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). Although, if you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you could agree the transfer with the existing lender until 4 November 2020.

More information is available on the Bounce Back Loan scheme.

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More information

Find out more about the Winter Economy Plan.

Read ACCA’s factsheet on accounting for Covid-related grants and reliefs.

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