Recovery Loan Scheme

The Recovery Loan Scheme has been extended until June 2022. Announced in the Autumn Budget 2021, the extension scheme has minor eligibility changes.

The Recovery Loan Scheme was launched in April 2021 as part of government-guaranteed finance throughout 2021, primarily in response to COVIV-19. The scheme was extended from 1 January 2022 until June 2022.

From 1 January 2022, the following changes will come into force:

• The scheme will only be open to small and medium-sized enterprises.
• The maximum amount of finance available will be £2 million per business.
• The guarantee coverage that the government will provide to lenders will be reduced to 70%.

From 6 April 2021 companies could apply for loans to support their businesses. It was originally launched In preparation for non-essential retail and outdoor hospitality reopening. In particular, HM Treasury identified coffee shops, restaurants, hairdressers and gyms.

The original terms of the Recovery Loan Scheme still apply, taking into account the newly announced limitations:

• Term loans and overdrafts are available from £25,001 to £10 million.
• Invoice finance and asset finance are available from £1,000 to £10 million.
• The government will guarantee 80% of the finance.
• No personal guarantees need for amounts up to £250,000 and no principal private residences to be accepted as security.
• Term loans and asset finance are available for terms up to six years.
• Overdrafts and invoice finance are available for terms up to three years.
• Interest rates have been capped at 14.99% and are expected to be much lower than that in the vast majority of cases, says HM Treasury.
• Qualifying criteria are that the recipient should be a UK trader with a viable business (if not for the pandemic), that has suffered an impact due to COVID-19. The business should not be in a collective insolvency procedure.
• Banks, building societies, insurers, reinsurers, public sector bodies and state-funded primary and secondary schools are not eligible.

The scheme, which was announced at Budget 2021 and ran until 31 December 2021. It will be administered by the British Business Bank, with loans available through a network of accredited commercial lenders with 26 already accredited. 

The Recovery Loan Scheme can be used as an additional loan on top of support received from the emergency schemes

• The Bounce Back Loan Scheme
• Coronavirus Business Interruption Loan Scheme which was put into place last year.
• The new Restart Grants scheme launched last week, providing funding of up to £18,000 to eligible businesses

Useful guides on this topic 

COVID-19: Loan funding
COVID-19: different types of loan funding. All loan funding is repayable. 

COVID-19: Government support tracker
This tracker covers measures announced by the government to support individuals and businesses, as we get through COVID-19.

HMRC give September deadline for bad debt collection
HRMC have published its policy document, 'Collecting tax debts as we emerge from coronavirus (COVID-19)'. It warns that should companies or individuals ignore HMRC, the agency would initiate enforcement action after a September 2021 deadline.

External links

The Recovery Loan Scheme

British Business Bank Recovery Loan Scheme: current accredited lenders