What is the Recovery Loan Scheme?

It’s been a tough time financially for many UK businesses over the past year. So, as we gradually begin to ease out of the pandemic, there’s likely to be an increasing need for extra funding to get your business operations back off the ground and on the road to recovery.

The new Recovery Loan Scheme replaces the now closed Coronavirus Business Interruption Loan Scheme (CBIL) and offers eligible UK businesses a way to borrow up to £10 million in extra funding. If you’re looking to stabilise and grow your company, this may be a lifeline.

The key points of the Recovery Loan scheme

Recovery Loans are available as either term loans, overdrafts, invoice finance or asset finance. The aim of the scheme is to provide cash-strapped UK businesses with the liquidity to get their business plans back on track. This may mean buying new equipment, hiring new staff or investing more cash into the growth and expansion of the business.

Is your business eligible to apply for a loan?

  • Who is eligible? The most important condition for the loan is that your business must be a UK trading company. Your company must also be able to show that the business:
    • is viable or would be viable were it not for the pandemic
    • has been impacted by the coronavirus pandemic
    • is not in collective insolvency proceedings – further details on this condition will be provided by the Government in due course.
  • Who is NOT eligible? Certain organisations are not eligible for the scheme, including non-UK trading companies, and UK-based banks, building societies, insurers and reinsurers (but not insurance brokers), public-sector bodies and state-funded primary and secondary schools.
  • What can I borrow? If you meet the above criteria, your UK company is then eligible to apply for a Recovery Loan from one of the approved lenders who have signed up to the scheme. Your options include:
    • Term loans or overdraft – you can borrow between £25,001 and £10 million per business in the form of a term loan or overdraft.
    • Invoice finance or asset finance – you can borrow between £1,000 and £10 million per business in the form of invoice finance or asset finance.
  • How do I apply for a loan? – the Recovery Loan Scheme launches on 6 April 2021, and will be open for loan applications until 31 December 2021. Details on which lenders will be providing the loan scheme are still sketchy, but it’s likely to be the same banks, lenders and business finance providers that offered the now defunct CBIL scheme.

NOTE: It’s worth noting that you CAN apply for the Recovery Loan Scheme, even if your business has already applied for a CBIL or Bounce Back Loan.

Talk to us about applying for a Recovery Loan

An injection of cash into your business may well be the boost that your company needs when it comes to securing your recovery in the post-Covid and post-Brexit landscape.

As your adviser, we can help you prepare all the numbers and reporting that’s required for a Recovery Loan application. We can also help you put together a robust plan and strategy for how to use this extra loan cash, once the funds are made available to you.