Recovery Loan Scheme (RLS)

The Recovery Loan Scheme (RLS) is a government scheme aimed at supporting access to finance for UK businesses and can be used for business purposes, including managing cash flow, investment and growth.

It is designed to support businesses that can afford to take out additional finance for these purposes. Businesses who have taken out a Coronavirus Business Interruption Loan (CBILS), a Coronavirus Large Business Interruption Loan (CLBILS) or a Bounce Back Loan (BBLS) facility are able to access the new scheme.

Subject to our lending policy, you can borrow between £250k and £2 million*, available with loan terms of up to six years and with satisfactory security being put in place for the RLS loan.

The loan can be used for business investment, to refinance existing debt, and for cash flow purposes.

You will be required to meet the costs of interest payments and any fees associated with the facility from the outset.

The Scheme provides us with a Government-backed 70% guarantee against the outstanding balance of the facility. Please note that you will continue to be liable for the entire loan amount, so will have to repay it in full by the end of your term. If you’re not able to repay it, we may seek to recover the outstanding balance from the proceeds of any security held by us for the loan. It is only after this that we will look to realise the government guarantee.

We are required to undertake standard credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants. When making our assessment, we may disregard concerns over short-to-medium term performance owing to the pandemic.

* Figures quoted apply to the borrower, if the borrower is part of a group it can borrow between £250k and £2million across the borrower group. Lower maximum loan amount restrictions apply to borrowers in scope of the Northern Ireland Protocol.

Yes, we want to support new borrowers as well as our existing customers. Taking part in the Scheme means we can offer loans to small and medium businesses (SMEs) in these uncertain times.

To apply for an RLS loan with us, you need to contact an independent broker. Using a broker means you benefit from independent advice and get help and guidance at each step of the process. Once you’ve found a broker you want to work with, they’ll start to put the application together with you. If we can offer a commercial loan on equivalent terms without the need to make use of RLS, we may do so.

Your broker will be able to guide you through the process. The documents you will need will typically include financial and management accounts for the last two years, bank statements and cash flow forecasts, alongside our RLS Supplementary application form.

The timescales from making your application to receiving your RLS loan can vary and you should always discuss your expectations with your broker. They should be in close contact with our team to understand our processing times.

No. These schemes (including BBLS Top-Ups) closed for applications on the 31st March 2021. New applications are no longer being accepted under these schemes.

Yes. If your business took out CBILS, CLBILS or BBLS facility you can still access RLS, providing you meet the eligibility criteria for RLS and any additional lending that we consider affordable.

If your business accessed CBILS, CLBILS, BBLS and/or RLS before 30th June 2022, you are still eligible to apply for a RLS loan dependent on meeting the eligibility criteria.

If you took out a BBLS loan, it may count towards the maximum aid subsidy allowance limits and could reduce the amount you can borrow under the RLS scheme rules. If you have received any aid through previous BBLS loans, you will have been informed by the lender at the time.

No. The following businesses are not eligible to apply:

• Banks, building societies, insurers and reinsurers (excluding insurance brokers);
• Public sector bodies;
• State funded primary and secondary schools.

The Scheme is open to most businesses, who meet the eligibility criteria and have a turnover of up to £45 million (per borrower group).

If your business has an existing facility under the

• Bounce Back Loan Scheme (BBLS)
• Coronavirus Business Interruption Loan Scheme (CBILS)
• Coronavirus Large Business Interruption Loan Scheme (CLBILS)
• Recovery Loan Scheme Phases 1 & 2 (RLS 1 & 2)

you can still access the new scheme, providing you are eligible and with total borrowing being subject to our assessment of affordability. However the total amount of subsidy you’ve received may affect the maximum amount you can borrow.

To be eligible for a facility under the Recovery Loan Scheme, you must meet certain eligibility criteria, including:

• Your business activity must be UK-based and generate more than 50% of turnover from trading activity (registered charities and further education establishments are exempt from this requirement). This includes income from investment/rental properties;
• You must be engaged in trading activity in the UK at the time you draw down the facility;
• You must provide a borrowing proposal that we consider viable. We may choose to overlook challenges in your business’s short to medium term performance resulting from the COVID-19 pandemic when we assess your application;
• You must not be in collective insolvency proceedings;
• Your business cannot be a bank/ building society; an insurer or reinsurer (though you can be an insurance broker); 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.

The scheme is open until 30th June 2024, subject to review by the British Business Bank.

While we offer secured business loans under RLS, the wider Scheme supports a range of business finance facilities, including overdrafts, asset finance and invoice finance. A full list of accredited lenders is available on the British Business Bank website.

An RLS loan can be used for any legitimate business purpose including managing cash flow, or for investment and growth purposes.

The interest rates and fees that we charge vary depending on the specific lending proposal, but we are participating in the Scheme because it enables us to pass on the economic benefit of the RLS guarantee to you, our borrowers.

Please speak to your broker, who will be able to give you full details on what fees and interest rates will be payable based on your application.

A Business is considered to be in difficulty if it has one of more of the following features:

1. It holds a credit rating, with a long-term issuer or debt rating below Credit Quality Step 5 from a recognised rating agency; or
2. It does not hold such a rating but is considered by the Lender to be:
1. Of poor credit standing; and
2. Subject to very high credit risk; or
3. The borrower is subject to Relevant Insolvency Proceedings.

We take all these elements into account in assessing an application through our standard processes in any case.

‘Relevant Insolvency Proceedings’ means the following UK proceedings:

1. Winding-up by or subject to the supervision of the court;
2. Creditor’s voluntary winding-up (with confirmation by the court);
3. Administration, including appointments made by filing prescribed documents with the court;
4. Voluntary Arrangements under insolvency legislation; and
5. Bankruptcy or sequestration

The ‘voluntary arrangements’ listed above include company voluntary arrangements and individual voluntary arrangements. Receiverships, members’ voluntary liquidations, restructuring plans under Part 26A of the Companies Act 2006 and schemes of arrangement under Part 26 of the Companies Act 2006 are not Relevant Insolvency Proceedings.

Yes, personal guarantees can be taken under the scheme, but Principal Private Residences (PPR) are excluded.

Yes, as long as you meet the Scheme eligibility requirements and do not borrow more than the maximum amount you’re entitled to. The maximum amount your business can borrow across different facilities and schemes will depend on a lender’s assessment of affordability and Scheme requirements.

Yes, where total financing needs (including any increase) are greater than the minimum facility sizes available under RLS.

Any refinancing will be considered as a new application for RLS, so you will have to meet the Scheme eligibility criteria. Refinancing can be sought with your existing lender or a different accredited lender.

If you are an existing BBLS borrower, you are able to refinance under RLS, however, borrower protections and scheme eligibility / terms under these schemes differ, so you should discuss it with your broker first. The total amount your business can borrow, including any additional lending sought as part of the refinancing of an existing facility, will depend on a lender’s affordability assessment and Scheme requirements.

Your business can, in certain circumstances, use an RLS facility to refinance existing debt where total financing needs (including any increase) are greater than the minimum facility sizes available under the Scheme. For example, where you are seeking to put your business on a more stable financial footing and/or improve its working capital position, then, in principle, a RLS facility could be used, providing your business fulfils the Scheme eligibility criteria. Refinancing can be undertaken with or without an increase in the original borrowing.

Our commercial lending policy allows for applications from Limited Companies, PLCs, Limited Liability Partnerships (LLPs), Partnerships and Sole Traders who are domiciled in the UK.

Within the wider Scheme, provided that they satisfy the other eligibility criteria, RLS is open to:

• Sole traders;
• Corporations;
• Limited partnerships;
• Limited liability partnerships;
• Co-operatives and community benefit societies; and
• Any other legal entity carrying out business activity in the UK with business activity operating through a business account.

Your business must generate more than 50% of its turnover from trading activity in the UK (i.e. the sale of goods or services), unless it is a registered charity or further education establishment.

Like many Government-backed business support activities, facilities provided under RLS are a subsidy as the Scheme constitutes financial help that gives an advantage to a business.

If you are outside the scope of the Northern Ireland Protocol, facilities provided under RLS are considered a subsidy under the UK/EU Trade and Co-operation Agreement (TCA) as incorporated into UK law by the European Union (Future Relationships) Act 2020 and constitutes small amounts of financial Assistance under the Act. After the UK’s Subsidy Control Act comes into force, RLS will constitute Minimal Financial Assistance under that Act.

If you are within the scope of the Northern Ireland Protocol, RLS counts as de minimis aid under the EU de minimis regulations.

If you are outside the scope of the Northern Ireland Protocol, the maximum value of subsidy you are eligible for is £315,000 in aggregate over this and the previous two fiscal years (ending 31st March).

If you are within the scope of the Northern Ireland Protocol, the maximum aggregate value of subsidy you are entitled to over this and the previous two financial years is:

• €20,000 or £17,000 if the business relates to the primary production of agricultural products
• €30,000 or £25,500 if the business relates to fisheries and aquaculture
• €100,000 or £85,000 if the business relates to road haulage, or
• €200,000 or £170,000 for all other sectors.

You will be required to provide written confirmation that receipt of an RLS facility will not mean the business will breach any of the above thresholds.

If your business has received any other relevant subsidy, you should have been provided with a written record of the amount provided.

No. Your lender will be responsible for informing you of the amount of subsidy you will be receiving. This will be dependent on whether you are inside or outside the scope of the Northern Ireland Protocol, the size of your facility, and the term length of your facility. The maximum you can potentially borrow will be impacted by any relevant previous subsidy you may have received over this and the previous two fiscal years (ending 31 March).

As an example, if your business:

• is outside the scope of the Northern Ireland Protocol,
• has not received any other relevant subsidy over this this and the previous two fiscal years (ending 31 March), and
• receives a facility of £2 million over six years, then
• the total amount of your subsidy will equal £315,000.

Or, if your business:

• is inside the scope of the Northern Ireland Protocol,
• is not in agriculture, aquaculture / fisheries, or road haulage sector,
• has not received any other relevant subsidy over this this and the previous two fiscal years (ending 31 March), and
• your business receives a facility of £1 million over six years, then

the total amount of your subsidy will equal £170,000 or €200,000

As part of the RLS Supplementary application form, you will need to complete the following three questions, which will assess whether or not you are potentially in scope of the Northern Ireland Protocol:

• Is your business established or registered in Northern Ireland?
• Does your business have any active subsidiaries, an active parent company, a business in the same corporate group and/or operations in Northern Ireland? Or does your business have plans to operate any such entities, or establish other operations in Northern Ireland within the next three years?
• Does your business provide a service or is it part of a supply chain which is specifically tailored to the needs of a customer or customers in Northern Ireland that manufacture or sell goods or participate in the NI wholesale electricity market?

If you answer no to all three questions, you are not considered to be in scope of the NI Protocol.

If you answer yes to any of the three questions, you will then be required to answer the additional question sets which allow us to determine whether or not you fall within scope of the Protocol and the maximum borrowing amount that will be available to you.

You will be subject to our standard credit and fraud checks.

Yes, we must consider your business to be viable. In assessing your borrowing proposal, we may disregard any concerns over short to medium term business performance due to the uncertainty and impact of COVID-19. However, we are not required to overlook these concerns and all final lending decisions are fully devolved to us.

Our existing lending policies continue to apply for RLS. In the instance your application is unsuccessful, you can apply to another lender. Your broker will be able to advise you on this.

Where required, information about facilities provided to businesses outside the scope of the Northern Ireland Protocol may be publicised on a new UK Government transparency database. Details of the UK reporting requirements will be required after the Subsidy Control Act 2022 comes into force and is expected to apply only where the amount of subsidy received exceeds £100,000.

Information on individual facilities for businesses in scope of the Northern Ireland Protocol are not expected to be made publicly available.

A subset of the information provided in your loan application may be published, including the:

• Identity of the borrower, for example, the name of the business or potentially the borrower name if they are a sole trader or in a partnership
• Type / size of business
• Region where the business is located
• Sector in which the business operates
• Date the aid was granted and the term of the facility, and
• Amount of aid granted.

The information reported is related to the business but may include personal data if the entity is a sole trader or partnership, or if the business name includes reference to a natural person.

Further information on how the Department of Business, Energy and Industrial Strategy (BEIS) and the British Business Bank process and share data can be found in the BEIS Privacy Notice and the British Business Bank Privacy Notice.

RLS aims to help businesses who can afford to borrow, to access the finance they need, including for managing cash flow, investment and growth. BBLS and CBILS were previous Government-backed schemes, and RLS was introduced to replace them.

Key differences between these schemes include: