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Recovery Loan Scheme - new phase now live

Author: ICAEW Insights

Published: 17 Mar 2021

August 2022: Business loans and other types of finance are available under a new phase of the UK government’s Recovery Loan Scheme. The scheme will run until 30 June 2024.

Official guidance

Purpose and form of funding

The scheme is intended to support business investment and growth.

Funding can be in the form of loans and other kinds of finance, up to £2m per business.

How it works

The Recovery Loan Scheme will be available through a network of accredited lenders listed by the British Business Bank.

The borrower is always 100% liable for the debt. The government however will guarantee to the lender 70% of the outstanding balance of the facility.

To compare the new scheme to earlier phases access Frequently Asked Questions for businesses

Already accessed Covid-19 debt schemes?

Businesses that received support before 30 June under Bounce Back Loans (BBLS), Coronavirus Business interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the version of the Recovery Loan Scheme that was in place until that date may still access this scheme but those borrowings may reduce the maximum amount they are eligible access.

Key features of the scheme

Types of finance: term loans, overdrafts, asset finance and invoice finance facilities

Maximum facilities:£2m (£1m if in scope of Northern Ireland protocol and dependent on sector. Check if you are in scope by going to Frequently Asked Questions for businesses)

Minimum facilities: £1k (asset and invoice finance); £25k (term loans and overdrafts)

Term: from 3 months to 6 years (terms loans and asset finance); from 3 months to 3 years (overdrafts and invoice finance)

Interest and fees: the business will meet the cost of intertest payments and fees associated with the facility

Pricing: the annual effective rate of interest and lenders fees cannot exceed 14.99%

Personal guarantees: personal guarantees can be taken at the lender’s discretion. Principal private residences cannot be taken as security. 

Full terms are available from the British Business Bank.

Eligibility and additional features

A business must be trading in the UK and trading activity must typically generate more than 50% of its income.

Turnover threshold: business turnover must not exceed £45m (on a group basis, if part of a group).

Covid-19 impact: most businesses do not have to declare a Covid-19 impact. The exceptions here are charities and Further Education Colleges.

Viability test: a business has a viable business proposition and the lender may disregard concerns over short-to-medium term business performance due to the impact of Covid-19.
A business cannot be in insolvency proceedings.

Subsidy limits: a business must provide written confirmation that receipt of a facility under the scheme will not cause the business to breach relevant thresholds relating to subsidies. Look up subsidy thresholds by going to Frequently Asked Questions for businesses 

Credit checks: Lenders will be required to undertake credit and fraud checks for all applicants. The checks and approach may vary between lenders.

Ineligible businesses and sectors:

  • banks, building societies, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools
  • an individual other than a sole trader or a partner acting on behalf of a partnership 

Additional information