Recovery Loan Scheme

By October 6, 2021No Comments

On 6th April 2021, the government replaced its bounced back program and CBILS with a new scheme called the Recovery Loan Scheme or RLS. This scheme is aimed to financially support the businesses that were affected by the COVID-19 pandemic. The scheme, however, has a short-span schedule for now and will end by the end of the year 2021.

Who is eligible for the recovery loan?

You can avail of the recovery loan if you meet the following eligibility criteria:

  • If you have a viable business that has UK-based trading.
  • If you have a trading period of over two years.
  • If you have a business company that is limited or has LLP.
  • If your business was adversely affected by the pandemic.
  • If you have at least 100k turnover of the business during the year 2019.
  • If the employee size is less than 250.
  • If you are not a part of any proceedings of collective insolvency.

What is the range of the recovery loan?

Businesses of all sizes can enjoy and benefit from the recovery loan scheme as the amount ranges between £25,001 and £10 million. You can get a loan up to 25% of the annual turnover of your business. If you have any debts or loans under the CBILS, it will be included in the 25%. It doesn’t include any debts that come under Bounce back loans.

It is important to note that the scheme offers flexible terms of 2 to 6 years. You don’t have to give any personal guarantee if the required loan amount is £250,000 or less.

How does it work?

The government has accredited some lenders who can lend you loans of different financing terms up to £10 million. The types of financial terms include overdraft, term loans, asset finance, and invoice financing.

The lenders are provided with a government-backed guarantee. You remain 100% liable for the debt as a receiver of the loan.

Interests and Fee:

All the collective fee which also include the upfront fee and determined interests is not more than 14.99% however, you are required to pay interest and fee determined by the government under the recovery loan scheme

Who is not eligible for the Recovery Loan Scheme?

All the public sector businesses and entities, bank owners, society-building business owners, primary or secondary schools that are funded by the state and insurers are not eligible to benefit from the recovery loan scheme. However, there is an exception for the insurance brokers.

The amount provided by the recovery loan scheme may be affected or limited by the amount that you have already taken out through the CBIL (Coronavirus Business Interruption Loan schemes), CLCILS, or BBLS (Bounce Back Loan Scheme).

The recovery Loan Scheme is a better scheme that the government has designed to support the businesses that are adversely affected by the pandemic. If you need to grow your business, maintain cashflows, or recover your losses, you can have a quick access to the recovery loan scheme.