Compare Recovery Loans

The Recovery Loan Scheme aims to help businesses build and grow as they come to terms with the effects of the pandemic. This scheme will allow businesses to continue to access support once other government loan schemes (CLBILS, CBILS, BBLS) close.

Recovery Loans come with an 80% government guarantee, which means the government will compensate the lender with this percentage of the loan if the borrower isn’t able to repay it. The guarantee aims to encourage lenders to approve loans to businesses, as it reduces the risk of the lender not getting its money back.

Bear in mind that, even with the guarantee, businesses are still fully liable for the debt.

The Recovery Loan Scheme is intended to support businesses and help them grow, but there are no restrictions on what exactly the money should be used for. Businesses could use a Recovery Loan to improve cash flow, to help with payroll costs, to invest in equipment or to fund any other projects that will be useful to their operations.

The Recovery Loan Scheme launches on 6 April 2021 and is set to close on 31 December 2021.

Most businesses trading in the UK can apply for a Recovery Loan; there are no restrictions regarding turnover or trading history.

However, some businesses, including banks, building societies, insurers and public sector bodies are not eligible for a Recovery Loan.

When applying for the Recovery Loan Scheme, businesses will need to show lenders that they have been adversely affected by the coronavirus pandemic and that, had there not been the pandemic and the subsequent restrictions, their business would be viable.

The Recovery Loan Scheme can offer term loans and overdrafts from £25,001 to £10 million per business.

Invoice finance and asset finance from £1,000 to £10 million are also available under the scheme.

Repayments will start immediately but you can choose up to six years to repay term loans and asset finance under the Recovery Loan Scheme, and up to three years to repay overdrafts and invoice finance.

With some standard business loans, the business owner/director will have to provide a personal guarantee to repay the lender themselves if their business can’t.

However, the Recovery Loan Scheme states that lenders will not take any personal guarantees on credit facilities worth up to £250,000, and that the borrower’s home can’t be taken as security.

If you borrow more than £250,000 under the scheme, lenders may ask for a personal guarantee.

As long as businesses meet the scheme’s criteria, they can apply for a Recovery Loan. Businesses that have accessed finance from a previous government guaranteed loan scheme such as the Coronavirus Business Interruption Loan Scheme (CBILS), the Bounce Back Loan Scheme (BBLS), or the Coronavirus Large Business Interruption Loan Scheme (CLBILS) are still eligible for a Recovery Loan.

Yes, lenders will conduct credit checks and fraud checks on every business that applies for a Recovery Loan. The exact checks and the requirements needed to get a loan may vary between lenders.

Businesses with bad credit can apply for a Recovery Loan, although there is no guarantee that they will be accepted. Lenders will review each individual application and conduct their own checks to decide if a business meets their eligibility criteria for a loan.

Having a good credit score will help your application, but businesses with bad credit that have a viable proposal may be able to find lenders that will approve their application.

Information correct at the time of publishing.