The Recovery Loan Scheme is designed to help businesses recover and grow after the disruption caused by coronavirus. It replaces the Bounce Back Loans Scheme and the Coronavirus Business Interruption Loans Scheme. Read on to find out more about the scheme, if you’re eligible and how to apply.
The Recovery Loan Scheme was announced by Chancellor Rishi Sunak in his Budget speech in March 2021.
The scheme will be open from 6 April until 31 December 2021. It takes over from the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme which both end on 31 March 2021.
Businesses can still apply for a loan under the CBILS scheme until the 31st March 2021 here.
The Recovery Loan Scheme is designed to help businesses recover and grow after disruption caused by coronavirus.
Businesses of any size, in any sector, can apply for funding of up to £10 million from accredited lenders.
You can use the funding for any legitimate business purpose, including growing and investing in your business.
The government guarantees 80% of Recovery Loans but the borrower is fully liable for the debt.
‘Guaranteed’ means that if the lender can’t collect the loan from the borrower, then the Government will reimburse the lender.
Although lenders don’t have to offer Recovery Loans, the government guarantee makes the scheme more attractive to them. With 80% of your loan amount guaranteed by the government, lenders have more security that they’ll get their money back if you can’t repay your loan.
The Recovery Loan Scheme covers different types of business finance and what’s on offer from lenders will vary.
How much you can borrow depends on the individual situation of your business and the type of finance that you require.
For term loans and overdrafts, you can borrow from £25,001 to £10 million. For invoice finance and asset finance, you can borrow from £1,000 to £10 million.
Businesses from any sector can apply. You’re eligible for a Recovery Loan if your business:
You aren’t eligible if your business is:
Yes. If you’ve already had or are getting a loan from one of the other coronavirus guaranteed loan schemes, you can apply for a Recovery Loan. And of course, you'll need to meet all the other eligibility criteria.
The Recovery Loan Scheme opens on 6 April 2021. To apply, you’ll need to choose a lender and apply directly with them.
The list of accredited lenders and more information about the Recovery Loan Scheme will be available on the British Business Bank’s website.
All applicants for government Recovery Loans will be credit-checked by lenders. Lenders also have to carry out fraud checks.
With a Recovery Loan, your repayments will start straight away. This is different from Bounce Back Loans, where borrowers don’t have to make any repayments for the first 12 months.
How long you get to repay the loan depends on the type of finance you take out. For term loans and asset finance, you’ll have up to six years to repay, while for overdrafts and invoice finance you’ll have up to three years to repay.
The government and lenders haven’t yet announced interest rates or fees for Recovery Loans. The interest rates are likely to be low because the loans are designed to help businesses recover and grow. Recovery Loans are different from commercial loans which are designed to earn money for the lenders.
With a Recovery Loan, you’ll have to pay any fees upfront and you’ll pay the interest yourself from the start. This is different from Bounce Back Loans, where the government pays the interest for borrowers for 12 months and borrowers don’t have to make any repayments for the first 12 months.
It depends on how much you borrow. For Recovery Loans of up to £250,000, lenders aren’t allowed to take personal guarantees.
This means no matter what amount you borrow, lenders can’t take your home (‘principal private residence’) as security.
The Recovery Loan Scheme is scheduled to close on 31 December 2021. The government will review this nearer the time. But bear in mind that lenders can choose to close applications sooner.
The Recovery Loan Scheme differs from the Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Scheme in several significant ways:
You might be contacted about some coronavirus support automatically, such as the coronavirus grants from your local council. But for other help, you’ll need to apply or claim. Here are some good places to look for more support:
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