The government recovery loan scheme (RLS) is available to businesses that have been impacted by the COVID-19 pandemic, providing a way to help them get back on their feet. If your business has been affected, you can apply for up to £10 million funding regardless of your business size, the sector you operate in, and whether you’ve accessed finance through previous schemes.
So what is the recovery loan scheme and how does it work? This is your complete 2021 RLS guide, which includes essential information on applications, repayments and the criteria you will need to meet.
How the Recovery Loan Scheme Works
With the recovery loan scheme, you can choose between a term loan, an overdraft, invoice finance or asset finance. 80% of the loan is government guaranteed but you are fully liable for repayments, which will begin straight away – the loan amount and term are agreed with the lender.
To access finance through the scheme, you will need to:
- Meet the RLS eligibility criteria. This means your business will need to be viable, or that it would be viable without the COVID-19 pandemic (you must not be in collective insolvency proceedings). You will also need to demonstrate that your business has been negatively affected by the pandemic.
- Apply for the RLS via an accredited lender. We can provide access to a wide panel of lenders and find the right option for you.
- Provide the necessary documents. This will include your business plan, management accounts, previous years’ accounts, information on assets your company owns, details of overdrafts or loans, and details of mortgages and credit card debt.
- Undergo a credit check. The specific checks may vary between lenders, as the decision on whether to lend lies with them and they will review applications individually.
- Agree the term with the lender. If you are offered finance by the lender, the details will be agreed directly with them.
Are you eligible for an RLS recovery loan? Check your eligibility with us, without having to undergo a credit check. Fill in our online form or book in some time to speak to an adviser.
How Much Will I Have to Repay with the RLS?
Interest rates will differ between lenders but under the rules of the scheme, they can’t be above 14.99%. Do be aware that you need to start making repayments, including interest, straight away.
The Loan is Government Guaranteed – What Does This Mean?
The government will guarantee 80% of a loan to the lender, which helps businesses by encouraging lending. Just be aware that this is different to the Bounce Back Loan Scheme, where the government guaranteed 100% of the loan, so lenders may be slightly more cautious. This government guarantee is issued to the lender, not to you as a business – you will still be liable for all repayments.