RLS aims to help businesses of any size across the UK affected by Covid-19, providing support for businesses to recover and grow following the disruption of the pandemic. It is designed to appeal to businesses that can afford to take out additional debt finance and can be used for any legitimate business purpose, including managing cashflow, investment and growth.

RLS guarantees a wide range of products, covering term loans, overdrafts, asset finance and invoice finance facilities. Businesses can borrow up to a maximum of £10 million, available on repayment terms up to six years (for term loans and asset finance) and up to three years (for overdrafts and invoice finance facilities).

Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.

Businesses will be required to meet the costs of interest payments and any fees associated with the facility from the outset.

Lenders will be required to undertake standard credit, fraud, Anti-Money Laundering (AML) and Know Your Customer (KYC) checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.

The scheme provides the lender with a government-backed 80% guarantee against the outstanding balance of the facility. The business remains 100% liable for repayment of the facility.

The scheme is open to most businesses, who meet the eligibility criteria, regardless of turnover.

A business with an existing facility under either the Bounce Back Loan Scheme (BBLS), the Coronavirus Business Interruption Loan Scheme (CBILS) or the Coronavirus Large Business Interruption Loan Scheme (CLBILS) can still access the new scheme, providing it is eligible and with total borrowing subject to a lender’s assessment of affordability.

To be eligible for a facility under the Recovery Loan Scheme, a business must meet certain eligibility criteria including but not limited to:

• Be able to self-certify that it has been impacted by Covid-19;

• Be UK-based in its business activity and generate more than 50% of its turnover from trading activity (registered charities and further education establishments are exempt from this requirement);

• Be engaged in trading activity in the UK at the time it draws down the facility;

• Have a borrowing proposal which would be considered viable by the lender. In making their assessment, lenders may, but are not required to, disregard any concerns over a business’s short-to-medium term business performance due to the uncertainty and impact of Covid-19; and

• Not be in collective insolvency proceedings. If the applicant is in scope of the Northern Ireland Protocol then (i) for micro and small enterprises the business was not subject to collective insolvency proceedings or in receipt of rescue aid; or (ii) for other businesses that are not micro and small enterprises they are not an “undertaking in difficulty”, as defined by the EU.

• A business cannot be a bank/ building society; an insurer or reinsurer (can be an insurance broker); a public-sector body; a state funded primary or secondary school; or an individual other than a sole trader or a partner acting on behalf of a partnership.

• If a lender can offer finance on normal commercial terms without the need to make use of the scheme, they may do so.

The scheme went live on 6 April and is open until 31 December 2021, subject to review.

Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.

The maximum value of a facility per business is the lesser of:

• £10m; or

• (i) double the businesses wage bill for 2019 or last year available

   

  , (ii) 25% of the applicant’s turnover in 2019, or (iii) the applicant’s liquidity needs for the coming 12 months (for large enterprises) or 18 months (for SMEs). If a business, or any of its linked or partner enterprises (including private equity and venture capital linked enterprises), have borrowed under CBILS or CLBILS then this will count towards a business’ maximum amount.

The maximum a business can borrow is also subject to a limit of £30m per borrower group, where applicable. In this instance, private equity and venture capital linked businesses are disregarded for the purposes of defining a business group.

Yes. Businesses with CBILS, CLBILS and BBLS facilities can access RLS, providing they meet the eligibility criteria for RLS and any additional lending is considered affordable by the lender.

Provided that they satisfy the other eligibility criteria, RLS is open to:

• sole traders;

• corporations;

• limited partnerships;

• limited liability partnerships;

• co-operatives and community benefit societies; and

• any other legal entity carrying out business activity in the UK with business activity operating through a business account.

The business must generate more than 50% of its turnover from trading activity in the UK (i.e. the sale of goods or services), unless they are a registered charity or further education establishment.

You may need to provide certain documents when you apply for a RLS backed facility. These requirements vary from lender to lender, but are likely to include:

• Management accounts

• Business plan

• Historic accounts

• Details of business assets

If you do not have everything listed here, a RLS facility could still be an option to provide finance to support your business.

Yes. A lender must consider your business to be viable, and in making their assessment of your borrowing proposal, they have the option of disregarding any concerns over short-medium term business performance due to the uncertainty and impact of Covid-19. However, lenders are not required to overlook these concerns and all final lending decisions are fully devolved to the lender.

You must also self-certify that your business has been impacted by Covid-19.