Business Advice · 21 July 2021

Support for SMEs affected by COVID-19: Recovery Loan Scheme

Recently, the government has launched the Recovery Loan Scheme, or RLS, to continue to help businesses move forward from the Covid-19 pandemic.

This new loan scheme follows on from the governments’ previous business loan schemes for businesses, which ran from 1st March 2010 to 31st March 2011, in the form of the Bounce Back Loan (BBL), up to £50k for small businesses with a turnover of less than £200k and the Covid-19 Business Interruption Loan Scheme (CBILS), up to 25% of turnover over £200k with a maximum loan value of £250k with no Personal Guarantee (PG) or £250k plus loans with a Personal Guarantee of 20% of the total value of the loan (for example a CBILS of £500k would require a Personal Guarantee of £100k).

This new Recovery Loan Scheme was due to begin on the 1st of April, however, due to the alternative lender market (these are lenders who are not the traditional high street banks) needing accreditation from the British Business Bank (BBB), this has taken much longer than expected.

Currently there are a number of alternative lenders that have received the accreditation from the BBB and some will offer RLS as standalone business loans and others with RLS combined along with asset and/or invoice finance.

At least one of the lenders will also decide, at the point of application, whether your business qualifies for the RLS or a standard loan.

With that in mind, in order for your company to be eligible for the RLS, you will need to meet certain criteria which are set by the BBB, as follows:

  1. You have been impacted by Coronavirus (COVID-19)
  2. You are (or, if you are part of a group of companies, your group is) or will be trading in the UK and generate more than 50% of your income from trading or commercial activity when you receive the Net Advance
  3. If you are borrowing less than £30,000, you will not use the loan to support export activities
  4. You are not a bank or building society, an insurer or reinsurer, a public-sector body, a state funded primary or secondary school or an individual other than a sole trader or a partner acting on behalf of a partnership
  5. The purpose of this RLS loan is to provide economic benefit to you i.e. for working capital or investment, and to support trading in the UK
  6. Your Loan Amount, together with any outstanding amounts you owe under Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme(CLBILS) or Recovery Loan Scheme (RLS) facilities does not exceed 25% of your turnover for 2019 or, if you are part of an extended group, the Loan Amount, together with any outstanding amounts you (together with any members of your extended group) owe under CBILS, CLBILS or RLS facilities, does not exceed 25% of the 2019 turnover of your extended group
  7. You have (or, if you are part of a group of companies, your group has) fewer than 250 employees and a turnover of not more than £45 million and/or an annual balance sheet total not exceeding £38,750,000
  8. If you have (or, if you are part of an extended group of companies, your extended group has) fewer than 50 employees and an annual turnover or annual balance sheet of less than £9m, you are not:
  9. subject to collective insolvency proceedings under national law; or
  10. in receipt of rescue aid (which has not been repaid) or restructuring aid (and are still subject to a restructuring plan)
  11. If you have (or, if you are part of a group of companies, your group has) at least 50 employees or an annual turnover or annual balance sheet of more than £9m, you have not:
  12. entered into collective insolvency proceedings or fulfilled the criteria to be put into collective insolvency proceedings
  13. previously received rescue aid that is yet to be reimbursed (or, in the case of a guarantee, terminated)
  14. received restructuring aid under which you are still under a restructuring plan)
  15. accumulated losses according to your latest accounts which are greater than half of your subscribed share capital (if you are a limited liability company) or capital (if you are a partnership or an unlimited liability company)

Once you have made the decision that an RLS is correct funding for you and your business, then most lenders would require at least the following to move forward:

  • Completed RLS application form with business and director details such as names, addresses, date of birth, length of trading and required loan amount
  • 2 years full accounts downloaded on to pdf
  • 6 months bank statements downloaded on to pdf