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Recovery Loan Scheme replacement for Covid-19 debt schemes

Author: ICAEW Insights

Published: 17 Mar 2021

20 April 2021: Business loans and other types of finance will be available under the UK government’s Recovery Loan Scheme, after the Covid-19 debt schemes close at the end of the month. The scheme is open from 6 April to 31 December 2021.

Official guidance

Purpose and form of funding

The purpose of the scheme is to help support business recovery, investment and growth, following the pandemic and the end of the transition period.

Funding will take the form of loans and other kinds of finance, up to £10m per business (up £30m per group).

How it works

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

The government will guarantee to the lender 80% of the outstanding balance of the facility.

Already accessed Covid-19 debt schemes?

Businesses that have received support under Bounce Back Loans (BBLS), Coronavirus Business interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS) can access this scheme, if they meet all other eligibility criteria.

Key features of the scheme

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

Maximum facilities: £10m

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: no personal guarantees will be taken on facilities up to £250k

Full terms are available from the British Business Bank.

Eligibility and additional features

A business must be trading in the UK and be able to show that it:

  • is viable or would be viable, were it not for the pandemic
  • has been impacted by the pandemic
  • is not in collective insolvency proceedings

There are no eligibility restrictions based on business turnover.

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

Full details will be available in due course from the British Business Bank

Additional information