What is the Recovery Loan Scheme?
Definition of Recovery Loan Scheme
The Recovery Loan Scheme is a temporary initiative designed to help businesses affected by the coronavirus (Covid-19) pandemic secure financial support from banks and other lenders. The government announced the scheme during the March 2021 Budget.
Under the Recovery Loan Scheme, businesses can apply for:
- a loan or overdraft of between £25,001 and £10 million per business
- invoice finance or asset finance of between £1,000 and £10 million per business.
The amount offered to each business under the scheme is at the participating lender’s discretion. Although the government will guarantee the lender up to 80% of loans and finance provided, up to a maximum of £10 million per business, the business that applies for the loan will be 100% liable for the debt.
The maximum length of the loan can be:
- up to three years for overdrafts and invoice finance
- up to six years for loans and asset finance
The scheme is open until 31st December 2021. You can find more information about how the Recovery Loan Scheme works on the British Business Bank website.
Who can apply for the Recovery Loan Scheme?
Most businesses that currently trade in the UK can apply for a loan under the Recovery Loan Scheme, including those that have received support through other Covid-19 initiatives, such as the Bounce Back Loan Scheme. HMRC states that business owners who apply for the Recovery Loan scheme need to show that the business has been adversely impacted by the pandemic and that it “would be viable if not for the coronavirus pandemic”.
Further information about the Recovery Loan Scheme is available on the government’s website.