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How the Business Recovery Loan Scheme Works

March 5, 2024
Andrew Knowles

The Recovery Loan Scheme (RLS) is designed to help UK businesses recover and rebuild after what has been, for many, a difficult and sometimes devastating year.


The Covid-19 pandemic has hit many firms hard. They’ve been forced to furlough staff or worse, make them redundant. Offices have been closed, adding new costs as businesses adapted to a home-based workforce. Some warehouses and production lines have remained open but often with reduced productivity and only after implementing sometimes costly protective measures. 

The business recovery loan scheme helps address these issues by giving businesses access to the working capital that’s essential for recovery.

The amounts available under the recovery loan scheme can be as little as £1k using the invoice or asset finance option, or from £25k as a loan. The finance available can be as much as £10 million per business. 


The difference between the Recovery Loan Scheme and a grant


The Covid-19 pandemic has sparked a flurry of grant opportunities, as both national and local governments have sought to provide support to businesses of all sizes. Many grants have been targeted at specific commercial sectors, such as hospitality or the arts, while other grant programmes have been more widespread.

Grants are not required to be repaid by the business that receives them. 

Unlike grants, the recovery loans must be repaid, typically over six years. These loans are government backed, meaning that the government guarantees that the lender will get 80% of the funding back. However, the business is not borrowing from the government but from an authorised lender, and the business will be responsible for repaying 100% of the loan, plus associated interest and fees.

Who can apply for a business recovery loan?   

Because the recovery loans are intended to help businesses get back on their feet after the pandemic, they are open to a very wide range of firms. The most basic criteria are:

  • The business must be trading in the UK.
  • It must not be in collective insolvency proceedings.
  • It would have been viable if restrictions resulting from the Covid-19 pandemic hadn’t occurred.
  • It has been adversely affected by the pandemic.
  • The business can’t be a bank, building society, insurer or reinsurer.

These recovery loan criteria are very broad, meaning that a very wide range of businesses can apply for them.

The loans can be applied for up to 31 December 2021. 

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Repaying the business recovery loan

The details of how business recovery loans will be repaid will be determined by the individual lenders. In broad terms, the loans will be repaid over a period of up to six years. However, invoice or asset finance repayments may be over just three years.

As part of their assessment process, the lender will determine whether they believe your business is capable of repaying the loan over the agreed period. This usually means they will ask for information about the financial history of  your business such as historic accounts, management accounts and a business plan.


They may choose to overlook concerns raised by weak business performance since March 2020, when the coronavirus pandemic began to significantly impact commercial life in the UK.


The lender will not request a personal guarantee for loans of under £250k, and under this scheme they cannot attach such a guarantee to the borrower’s principal private residence.

How we can help

We’re working with many UK businesses looking to recover and rebuild after the disruption of the Covid-19 pandemic. The business recovery loan scheme is a valuable opportunity for them to secure the working capital they require for growth.


If you’re looking for growth funding that allows you to push forward in 2021, talk to one of our team. Get in touch today to discuss whether a recovery loan could be right for you.

Jamie Davies
Managing Director

As a founder of multiple businesses, Jamie believes that mindset, discipline and ambition are key drivers for success, both for his businesses and for his clients. 

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Disclaimer: Spark Finance Ltd (Registered office - 18 John Stow House, London, England, EC3A 7JB, Registered Number 10128297) helps UK firms access business finance. Spark is a credit broker, not a lender. Any quotes provided are for information purposes only and subject to status and separate lender terms and conditions. Applicants must be aged 18 and over.  Guarantees and Indemnities may be required.  Spark Finance may receive commission from lenders  which may vary depending on the lender, product, or other permissible factors. The nature of any commission model will be confirmed to you before you proceed.

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