What is the Recovery Loan Scheme and how can my business benefit?

15 March 2021

Government introduces new Recovery Loan Scheme providing businesses with access to finance to help them recover and grow.

This page was updated on 10 January 2022.

On 3 March 2021, the Chancellor announced the introduction of the new Recovery Loan scheme which will provide all UK businesses, regardless of size, access to finance to help them recover from the COVID-19 pandemic. Once received, the finance can be used for any legitimate business purpose, including managing cash flow, investment and growth.

This new debt finance programme launched on 6 April and replaced the previous COVID-19 guaranteed loan schemes which ended on 31 March. It enables businesses of all sizes to access term loans, overdrafts, invoice finance and asset finance up to £10 million with the government providing an 80% guarantee to accredited lenders. 

In the Autumn Budget, the Chancellor extended the scheme to 30 June 2022 while announcing that the scheme will change from 1 January 2022 and will only be open for SMEs providing finance up to £2 million per business with a 70% government guarantee for lenders.

The Growth Hub’s Access to Finance team can provide businesses in Greater Manchester and Lancashire with impartial, fully funded support to access this new scheme or any other source of finance.

What finance products are available? (Applicable from January 2022)

Types of finance	Finance available	Finance terms
Term loans	between £25,001 and £2 million per business	up to 6 years
Overdrafts	between £25,001 and £2 million per business	up to 3 years
Asset finance	between £1,000 and £2 million per business	up to 6 years
Invoice finance	between £1,000 and £2 million per business	up to 3 years

Key points to consider

The scheme has been extended and will close on 30 June 2022.
Businesses will be required to meet the costs of interest payments and any fees associated with the facility from the outset.
All applicants will be subject to credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks (these may vary between lenders). When making their assessment, lenders may overlook concerns around short-to-medium term performance because of the pandemic.

For facilities up to £250,000, lenders are not permitted to take personal guarantees.
A borrower’s principal private residence cannot be taken as security.

Is my business eligible to apply?

To apply for a loan, you must:

Be trading in the UK,
Demonstrate that your business:
- is viable or would be viable were it not for the pandemic
- has been impacted by the COVID-19 pandemic
- is not in collective insolvency proceedings

Note: From 1 January 2022, the scheme is only open to businesses with a turnover not exceeding £45m per annum.

Recovery loans are available to businesses in all sectors, except the following:

banks, building societies, insurers, and reinsurers (but not insurance brokers)
public-sector bodies
state-funded primary and secondary schools.

Note: You will be eligible to apply for a recovery loan even if you have already accessed support through the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bounce Back Loan Scheme (BBLS). 

A series of FAQs including the full eligibility criteria for the scheme have been published on the British Business Bank website.

How can I apply?

To find a Recovery Loan Scheme accredited lender, visit the British Business Bank website.

Note: Not every lender accredited to offer Recovery Loans can provide every type of finance available under the scheme, and the amount of finance offered can vary between lenders.

For more information on how the scheme works and how to apply for a loan visit the British Business Bank website.

More information is available on the UK Government’s Coronavirus Business Support website. For more personalised advice call us on: 0161 359 3050 or email us at: BGH@growthco.uk 

The information provided is meant as a general guide only rather than advice or assurance. GC Business Growth Hub does not guarantee the accuracy or completeness of this information and professional guidance should be sought on all aspects of business planning and responses to the coronavirus. Use of this guide and toolkit are entirely at the risk of the user. Any hyperlinks from this document are to external resources not connected to the GC Business Growth Hub and The Growth Company is not responsible for the content within any hyperlinked site.