The lowdown on the SME Recovery Loan Scheme (RLS)

CBIS is dead! Long live the Recovery Loan Scheme! In April 2021 the CBILS loan scheme ended.

The lowdown on the SME Recovery Loan Scheme (RLS)

CBIS is dead!  Long live the Recovery Loan Scheme! In April 2021 the CBILS loan scheme ended. According to official HM Treasury figures, as of March 2021, £23.28 Billion of lending was approved from 98,344 loans. A total of 233,247 applications were made (although judging by the last few weeks here at Capitalise those numbers are likely to be much higher as businesses rushed to meet the deadline). 

Earlier this year the government announced that The Recover Loan Scheme (RLS) would be launched as a replacement scheme to continue supporting businesses affected by the pandemic – to support them as they recover and grow. As I write this, over 20 lenders are now accredited to the RLS. However, as was the case with CBILS, that number is expected to increase over the coming weeks.

Being at the forefront of business lending over the past 5 + years I wanted to lay out some of the key points of the new scheme as well as the differences between the RLS and CBILS.

How long is the scheme open for? 

Currently the RLS will run from the 6 April – 31 December 2021

What quantums of lending are available? 

£1,000 for asset and invoice finance facilities and £25,001 for term loans and overdrafts.  The maximum amount of a facility provided under the scheme is £10m per business (maximum £30m per group). 

Are there any turnover limits similar to CBILS? 

There will be no turnover restriction for businesses accessing the scheme.

Range of products: 

Businesses will be able to choose from a variety of products: term loans, overdrafts, asset finance and invoice finance facilities.

Are there any specific eligibility criteria?  

Much like CBILS you need to prove your business is viable or would be viable had it not been for the pandemic. Your business needs to have been impacted by the pandemic and be trading in the UK, whilst not in collective insolvency proceedings.

What has stayed the same as CBILS?  

  • No PG’s up to £250k
  • Same criteria in terms of business in difficulty, viability and be a UK trading business
  • Public sector, banks, building societies, insurers and reinsurers, and state funded primary and secondary schools cannot apply
  • Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years
  • The government will guarantee 80% of the finance to the lender to ensure they continue to have confidence to lend
  • a borrower’s principal private residence cannot be taken as security

What is different from CBILS? 

  • Interest and fees to be paid by the business from the outset. Businesses will be required to meet the costs of interest payments and any fees associated with the facility
  • Starts from £25k and goes up to £10m 
  • No turnover limit for applications (£45m previously) 
  • No 25% of turnover limit 
  • No more secured product
  • The annual effective rate of interest, upfront fee and other fees cannot be more than 14.99%
  • Term of facility: for term loans and asset finance facilities: from three months up to six years
  • Term of facility: for overdrafts and invoice finance facilities: from three months up to three years

Can I access the RLS if I previously had a CBILS or Bounce Back facility?

Yes. Businesses that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under the RLS as long as they meet all other eligibility criteria.

How to apply?

A business can apply for the scheme directly through one of the accredited lenders. However, as we saw with CBILS, the application success rate is higher with a business 4 x more likely to get the funding when working with their accountant and using the Capitalise platform. 

The recovery loan scheme continues to provide access to funds of businesses who are looking to grow or recover their business in the wake of the COVID pandemic and, as with CBILS, offers some of the best ways on the market to access Capital (especially without the need for personal or business security).  

Phil Hobden
Phil Hobden

Share via
Copy link