The Recovery Loan Scheme has been expanded and renamed the Growth Guarantee Scheme from 1 July 2024. You can find out more about the Growth Guarantee Scheme here.
About this system
The Recovery Loan Scheme (RLS) is a government-backed loan scheme designed to help raise capital for UK businesses looking to invest and grow.
Borrowers not covered by the Northern Ireland Protocol can be supported with loan sizes of up to £2 million. Borrowers covered by the Northern Ireland Protocol can borrow up to £1 million, unless they operate in a sector where the aid limits are reduced, in which case a lower cap applies to the maximum amount they can borrow. This includes agriculture, fishing/aquaculture and road freight transport.
A company can use this money for any legitimate business purpose, including managing cash flow, investing, and growing. However, a company must be able to afford to raise additional debt capital for these purposes.
The British Business Bank administers the scheme on behalf of the Secretary of State for Business and Trade.
See our list of approved lenders
The main features of this scheme:
The Recovery Lending Scheme aims to improve the terms offered to borrowers. If lenders are able to offer commercial loans on better terms, they will do so.
Key features include:
Up to £2 million per business group: The maximum loan amount provided under the scheme is £2 million per business group for borrowers outside the scope of the Northern Ireland Protocol and up to £1 million per business group for borrowers under the Northern Ireland Protocol. Minimum loan amounts vary, starting from £1,000 for asset and invoice finance and £25,001 for term loans and overdrafts. Range of products: RLS supports term loans, overdrafts, asset finance and invoice finance lending. Not all lenders can offer all products. Term: Term loan and asset finance facilities are available from 3 months up to 6 years, while overdraft and invoice finance are available from 3 months up to 3 years. Access to multiple schemes: Businesses that have utilised the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), Bounce Back Loan Scheme (BBLS) or RLS facilities before 30 June 2022 will not be prevented from accessing the RLS, however in some cases borrowing under these schemes may reduce the maximum amount available to the borrower. Pricing: Interest rates and fees charged by lenders vary and depend on the particular loan offering. Lender pricing takes into account the merits of government guarantees. Personal guarantees: Personal guarantees may be obtained at the lender's discretion, in line with normal commercial lending practice. A primary personal residence cannot be taken as security under this scheme. The guarantee is made against the lender. Under the scheme, a 70% government guarantee is provided to the lender against the outstanding balance of the loan after the normal collection process has been completed. The borrower remains 100% liable for the debt at all times. Decision-making is delegated to the lender. RLS guaranteed loans are offered at the lender's discretion. Lenders are required to conduct standard credit and fraud checks on all applicants.
The assistance provided through the RLS, like many government-backed business support efforts, is considered a grant and is considered to benefit the borrower. There are limits on the amount of grant a borrower and its group can receive over a three-year period. Previous receipt of a grant may reduce the amount a business can borrow. More information about grants can be found here.
The eligibility criteria are:
Turnover limits: the scheme is open to SMEs with a turnover of up to £45 million (on a group basis if part of a group). UK-based: borrowers must have a trading activity in the UK and for most businesses, derive more than 50% of their income from trading activities. Viability test: lenders must consider that the borrower has a viable business proposition, but may (at the lender's discretion) disregard concerns about the short to medium term business performance due to the uncertainties and impacts of COVID-19. Businesses in difficulty: borrowers must not be businesses in difficulty, including being in relevant insolvency proceedings. Grant limits: borrowers must confirm in writing that receipt of the RLS facility will not result in the business exceeding the maximum amount of grant that it is permitted to receive. All borrowers receiving grants from publicly funded programmes must be provided with a written statement confirming the level and type of assistance received.
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