What is the Recovery Loan Scheme?

The Greater Birmingham Chambers of Commerce

The UK Government introduced the Recovery Loan Scheme in April 2021 to help businesses access finance as they grow and recover from the economic disruption of the Covid-19 pandemic.

Small and medium sized enterprises can apply to access loans and other kinds of finance, with the Government guaranteeing 70% of the finance to the lender. Loans are available through a network of accredited lenders who have been identified by the British Business Bank.

How do I know if I am eligible for the recovery loan scheme?

You must be a small or medium sized enterprise trading in the UK to qualify for the Recovery Loan Scheme. Small or medium-sized enterprises are considered those with a turnover not exceeding £45 milllion per annum.

You must also be able to show that your business has been adversely impacted by the pandemic, would be viable were it not for the pandemic, and is not in collective insolvency proceedings.

If your business has received support under other Covid-19 guaranteed loan schemes, you will still be eligible to access finance through the Recovery Loan Scheme provided you meet the eligibility criteria. However, in some circumstances, this may limit the amount you can borrow under the Recovery Loan Scheme.

You can not apply if your business falls into any of the following sectors:

  • Banks, building societies, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • State-funded primary and secondary schools

What types of finance are available under the recovery loan scheme?

A lender can provide up to £2 million as one of the following facilities:

  • Term loan
  • Overdraft
  • Invoice finance
  • Asset finance

How much can I borrow under the recover loan scheme?

Businesses can receive term loans or overdrafts of between £25,001 and £2 million per business or invoice and asset finance of between £1,000 and £2 million per business.

No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.

As the borrow, you are always 100% liable for the debt.

How long is the recovery loan for?

The maximum length of the loan depends on the type of finance for which you apply. Overdrafts and invoice finance facilities have a maximum length of up to three years, whereas loans and asset finance facilities have a maximum length of up to six years.

How can I apply for a recovery loan?

You will need to find a current accredited lender via the British Business Bank’s website, using the filter buttons to find a lender which provides the type of finance in which you are interested.

Where can I find more information about the Recovery Loan Scheme?

You can find more information about the scheme from the British Business Bank, including a detailed guide for businesses applying for the scheme.

Alternatively, for more advice and support, you can refer to our COVID Support Hub.