Recovery Loan Scheme (RLS)

The new iteration of the Recovery Loan Scheme (RLS) launched in August 2022 and is designed to support access to finance for UK small businesses as they look to invest and grow.

The Recovery Loan Scheme aims to improve the terms on offer to borrowers. If a lender can offer a commercial loan on better terms, they will do so.

Businesses that took out a CBILS, CLBILS, BBLS or RLS facility before 30 June 2022 are not prevented from accessing RLS from August 2022, although in some cases it may reduce the amount a business can borrow.

 

Recovery Loan Scheme-backed facilities are provided at the discretion of the lender. Lenders are required to undertake their standard credit and fraud checks for all applicants.

Paragon’s RLS criteria

Our RLS funding is dedicated to supporting GB businesses investing in assets.

  • Up to £2m facility per business group: The maximum amount of a facility provided by Paragon under the scheme is £2m per business group. Paragon’s RLS funding is not available to businesses that are or may be inside the scope of the Northern Ireland Protocol. Minimum facility amount is £50,000.
  • Term length: Asset finance facilities provided by Paragon under the scheme are available from 36 to 72 months.
  • Personal Guarantees: Personal guarantees can be taken at the lender’s discretion, in line with their normal commercial lending practices. Principal Private Residences cannot be taken as security within the scheme.
  • Guarantee is to the Lender: The scheme provides the lender with a government-backed 70% guarantee against the outstanding balance of the facility after it has completed its normal recovery process. The borrower always remains 100% liable for the debt.
  • Subsidy: The assistance provided through RLS, like many Government-backed business support activities, is regarded as a subsidy and is deemed to benefit the borrower. There is a limit to the amount of subsidy that may be received by a borrower, and its wider group, over any rolling three-year period. Any previous subsidy may reduce the amount a business can borrow.

    All borrowers in receipt of a subsidy from a publicly-funded programme should be provided with a written statement, confirming the level and type of aid received.

    Borrowers will need to provide written confirmation that receipt of the RLS facility will not mean that the business exceeds the maximum amount of subsidy they are allowed to receive.
  • Northern Ireland Protocol: All borrowers will need to answer some questions to determine whether they are inside or outside the scope of the Northern Ireland Protocol, to determine the relevant subsidy limit and hence the potential maximum amount they can borrow under RLS.

Who is eligible to apply for the RLS?

To be eligible for lending under the RLS, a business must meet certain eligibility criteria including but not limited to:

  • Turnover limit: The scheme is open to smaller businesses with a turnover of up to £45m (on a group basis, where part of a group).
  • UK-based: The borrower must be carrying out trading activity in the UK.
  • No Covid-19 impact test required: Unlike with the previous phases of the scheme, for most borrowers there is no requirement to confirm they have been affected by Covid-19. For charities and Further Education colleges, confirmation of Covid-19 impact will still be required in some instances.
  • Viability test: The lender will consider that the borrower has a viable business proposition but may disregard any concerns over its short-to-medium term business performance due to the uncertainty and impact of Covid-19.
  • Business in difficulty: The borrower must not be a business in difficulty, including not being in relevant insolvency proceedings.
  • Purpose: The facility must be used to support trading in the UK and cannot be used to support certain export related activities.

The following are not eligible under the RLS:

  • Banks, Building Societies, Insurers and Reinsurers (excluding Insurance Brokers).
  • Public sector bodies.
  • State funded primary and secondary schools.

For more information on our Recovery Loan Scheme support for asset financing, please email [email protected]

Business Finance Support

The British Business Bank has a range of guidance and resources available to all businesses, including content on managing your cashflow and a list of independent advice services.

Working with British Business Bank

The Recovery Loan Scheme is managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA.
Visit www.british-business-bank.co.uk/recovery-loan-scheme

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551