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Guidance on Recovery Loan Scheme
With the final application dates for support under the existing Coronavirus Loan Schemes (Coronavirus Business Interruption Loan Scheme and Bounce Back Loans) being 31 March 2021, a new loan scheme to support UK business as they grow and recover from the disruption of the COVID-19 pandemic has been launched by the Government.
The scheme launches on 6 April 2021 and is open until 31 December 2021, subject to review. Loans will be available through a network of accredited lenders, whose names will be made public in due course.
What business finance options will be available?
- Asset Finance
- Business Loans
- Hire Purchase
- Invoice Finance
Benefits of the Recovery Loan Scheme
- The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses.
- No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
- Term loans and overdrafts will be available between £25,001 and £10 million per business.
- Invoice finance and asset finance will be available between £1,000 and £10 million per business.
- Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
- No minimum annual turnover requirement.
- No minimum trading history requirement.
Eligibility for the Recovery Loan Scheme
Portman Asset Finance are here to help businesses access the Recovery Loan Scheme for emergency funding throughout this situation if the business:
- Is trading in the UK
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
- Self-certify that it has been adversely impacted by the coronavirus (COVID-19)
- Is not in collective insolvency proceedings.
Businesses who have accessed previous Coronavirus Loan Schemes will still be eligible for finance under this scheme if they meet the eligibility criteria.
How to apply for the Recovery Loan Scheme?
The scheme will launch on 6 April 2021. Further details on how to apply and details of accredited lenders will be released in due course.
For more information, see our business finance options and more on the Recovery Loan Scheme from Portman.
Government-backed Finance FAQs
Can you have a CBILS, Bounceback or RLS loan and be given GGS?
Businesses that took out a Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or a Recovery Loan Scheme (RLS) facility before 30 June 2022 are not prevented from accessing the Growth Guarantee Scheme, but borrowing under some of these Schemes may reduce the maximum amount the borrower is eligible for.
How long does an RLS facility last?
An RLS facility lasts up to six years for loans and asset finance. Overdraft and invoice finance facilities last up to 3 years.
I thought the Recovery Loan Scheme finished?
Recovery Loans ‘RLS’ was launched by the UK Government on 1st September 2022 but was closed to further applications on midnight on 30th June 2024. However, the Growth Guarantee Scheme has taken its place as the current government-backed finance initiative, recently extended until 31st March 2030, with a pledge of an additional £500m in funding.
Is the Recovery Loan Scheme ending soon?
The Recovery Loan Scheme was launched on 1st September 2022 and was closed to further applications from midnight on 30th June 2024. However, government-backed funding was brought back through the Growth Guarantee Scheme which will run until 31st March 2030, following an announcement in the Government’s Spring Budget, with a pledge of an additional £500m in funding.
What can a Recovery Loan be used for?
Businesses can borrow between £10,000 and £2,000,000. Any investment plans that require funding can be accelerated using a finance product that protects an individual’s Principal Private Residence. Repayment periods are up to 6 years. The loan can be used for any legitimate business purpose including: equipment, vehicles, cashflow, stock, refurbishments, technology and marketing.
Can I pay my Recovery Loan off early?
You can pay your Recovery Loan off at any time. Your lender can provide you with a settlement fee, which you can then pay directly to them. That’s it! Portman will not be your lender for a Recovery Loan, check your paperwork to find out who your lender is.
