What is a Government Recovery Loan Scheme?

The Governments Recovery Loan Schemes are designed to support small and medium-sized businesses to access the funding they need to grow and invest during challenging economic times. The finance can be used for any legitimate business purpose, including working capital or investment in new assets and equipment. 

The loan amount and repayment terms offered typically depend on your business trading history and other circumstances unique to your situation. 

How Government Recovery Loans Schemes work. 

Every loan scheme is typically slightly different. At the time of writing this blog, the government currently guarantees 70% of the finance to the lender. This means your business will be required to secure the remaining 30%. 

How to check my Eligibility for a Recovery Loan?

You may be eligible for a loan through the Recovery Loan Scheme if your business:

  • is trading in the UK
  • has a turnover of £45 million or less

You need to show that your business:

  • is viable
  • is not in difficulty

Businesses that received support under the earlier COVID-19 loan guarantee schemes and earlier phases of the Recovery Loan Scheme are eligible to access finance under this scheme if they meet all other eligibility criteria.

Charities and further education colleges that generate not more than 50% of their turnover from trading activity must confirm they have been impacted by COVID-19 in order to be eligible for the scheme. There is no requirement for any other sectors to have been impacted by COVID-19.

Who cannot apply for Recovery Loans?

Businesses from any sector can apply, except:

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

What you can borrow?

  • term loans or overdrafts of between £25,001 and £2 million per business group
  • invoice or asset finance of between £1,000 and £2 million per business group
  • A borrower’s principal private residence cannot be taken as security.

How long are the typical repayment terms?

The maximum length of the facility depends on the type of finance you apply for and will be:

  • up to 6 years for loans and asset finance facilities
  • up to 3 years for overdrafts and invoice finance facilities