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19th October 2021Recovery Loan Scheme: What you need to know

Update (29th October 2021):
During the Autumn Budget 2021, the Chancellor announced that the Recovery Loan Scheme would be extended until 30 June 2022.

From 1st January 2022, the following changes will come into effect:

  • The scheme will only be open to small and medium-sized enterprises
  • The maximum amount of finance available will be £2M per business
  • The guarantee coverage that the government will provide to lenders will be reduced to 70% from the 80% previously guaranteed
  • No personal guarantees will be taken on facilities up to £250,000 and a borrower’s principal private residence cannot be taken as security.

These changes will apply to all offers made from 1 January 2022.


We are now in Q4 and there are less than 90 working days left of the year. It is critical that businesses begin planning for 2022. It’s been a difficult 18 months and now it is important for businesses to have a clear post  Covid-19 recovery plan in place.

An important option for businesses is the Government’s Recovery Loan Scheme (RLS), which aims to support UK companies trying to access finance which is needed in recovering from the COVID-19 pandemic.

Simon Michaels shares his analysis of the scheme and outlines why this could be an opportunity for businesses to consider consolidating their current debt:

“A vital part of year end planning with our clients is to focus on cash planning and forecasts for the next 12 months. Whatever stage of your business lifecycle, it is never too late to see the benefits of a formal business plan. Planning ahead to tackle potential bumps in the road is essential. If you are seeking financial assistance through additional sources of finance, you will once again need to demonstrate that your business is viable and provide a narrative around the business strategy. As we approach the end of the year, I would urge businesses to think seriously about their 2022 strategy and the next steps needed to get there.”

About the scheme:

The RLS has been designed to help businesses of any size as they grow and recover from the disruption of the Covid-19 pandemic. It launches on 6 April and is open until 31 December 2021 (subject to review).

Who is eligible?

  • UK-Based businesses
  • Have been affected by the coronavirus pandemic
  • Be able to afford to repay the loan for a term of up to six years
  • You’re eligible even if your business has already used the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS), or the Coronavirus Large Business Interruption Loan Scheme (CLBILS). However, the amount you’ve borrowed under an existing scheme could affect how much you can borrow under the Recovery Loan Scheme

How long are the loan repayments?

  • The maximum length of the facility depends on the type of finance you apply for and will be:
    • Up to 3 years for overdrafts and invoice finance facilities
    • Up to 6 years for loans and asset finance facilities

How much can a company borrow?

  • The minimum amount provided under the scheme is £25,001, and the maximum is £10 million per business. However, there is a total maximum of £30 million per group available

Who cannot apply?

Businesses from any sector in the UK can apply, except:

  • Banks, building societies, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • State-funded primary and secondary schools

If you have any questions regarding the Recovery Loan Scheme or are interested in applying for the scheme, please contact HW Fisher.

Key contacts

Simon Michaels HW Fisher

Simon Michaels
Partner

02038273975
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