Throughout the various lockdowns, there was a lack of social interaction and buying, and this severely impacted businesses to the point that many are still trying to recover.

However, the government-funded Recovery Loan Scheme (RLS) was designed during the peak of the Coronavirus pandemic to help support small, medium, and large businesses alike with surviving the financial crisis brought on by COVID.

The RLS initially launched on 6th April 2021 and initially replaced all previous Covid-19 government debt schemes (CBILS, CLBILS, and BBLS) and ran until 30th June 2022 with the aim of helping SMEs and large organisations recover in the post-pandemic economic landscape.

On 20th July 2022, the government announced the RLS will be extended for another two years. Furthermore, no personal guarantees are required for loans of up to £250k, and you can borrow on top of your existing BBL and CBILS loans.

The RLS offers businesses two different types of loans, one of which being term loans or overdrafts of £25,001 up to £10 million. The alternative loan is invoice or asset finance of £1,000 up to £10 million.

Is the Recovery Loan Scheme the right option for my business?

Any small, medium or large businesses that have been financially impacted due to the pandemic, and are still recovering from it, can apply for the Recovery Loan Scheme.

One of the key benefits of the RLS is the flexibility of the loan; borrowing loans range from £1,000 to £1,000,000, depending on the lender. Furthermore, these organisations have the flexibility to use the funds for any business expense for up to six years.

Due to the increased need and use of RLS, applications are usually processed in 24 hours, while another advantage of RLS loans is that no personal guarantees are required for loans up to £250k. However, for loans that exceed this amount, there is a 20% partial personal guarantee.

One thing to note is that lenders usually charge an agreement fee, also known as a fixed annual interest rate, which can usually be agreed beforehand.

Am I eligible for the Recovery Loan Scheme?

All trading businesses within the UK are eligible to apply for the Recovery Loan Scheme; however, you will need to provide proof of how your company has been impacted by the pandemic, while also showing that your business is not in collective insolvency proceedings.

Furthermore, businesses that have already received financial support or loans, such as CBILS or a Bounce Back Loan, are still eligible to apply. Even businesses that have been rejected from previous loans or funding applications can apply for the RLS.

The length of your RLS loan depends on the finance type chosen. For example, invoice and overdrafts finance are up to three years, while loans and asset finance are up to six years.

Another option is speaking to industry experts to ensure you give your business the opportunity to return to a comfortable financial state and manage cash flow, investment and growth successfully.