Business Recovery Loan Scheme

March 23, 2021
Construction Worker

Business Recovery Loan Scheme 


The UK has launched a new programme to help businesses get back to growth after more than a year of lockdowns. The Recovery Loan Scheme gives firms hit by Covid-19 the opportunity to take out loans backed by an 80% guarantee from the government.

The impact of the coronavirus on businesses

The sales and profit figures of many UK firms have taken a severe beating since coronavirus forced the first lockdown in March 2020. Since then some businesses have been forced to close, others have had to mothball their premises, and many have lost working days due to staff sickness.

The full extent of the damage is yet to be calculated. It could be many months, if not years, before some businesses fully recover. Ongoing restrictions around social distancing could continue to reduce sales and push up costs for many, particularly in the hospitality sector, for a long time to come.

In a snapshot of statistics, the Office for National Statistics reported that in September 2020 nearly half of UK businesses (47%) experienced a decrease in turnover. More than four in ten businesses saw profits fall compared with what they would usually expect at that time of year. In that same period, 14% of businesses were not trading at all.

It wasn’t all bad news. Online sales increased substantially, and ecommerce firms reaped benefits from lockdown. 

However, the overall picture for UK firms was poor. Small and medium-sized companies, in particular, saw their profits and bank balances shrink. Businesses that often find it hardest to raise capital were faced with the challenge of needing cash to fund their recovery.


Previous business support programmes


  • VAT deferral - Companies could defer their VAT payments.
  • Coronavirus Bounce Back Loan - The Bounce Back Loan allowed firms to borrow for 12 months without paying any interest, and then pay interest at a rate of 2.5% per year for six years.
    Coronavirus Business Interruption Loan - This scheme allowed businesses to borrow had they been adversely affected by the pandemic.
  • Scheme runs 6 April 2021 to 31 December 2021.
  • The UK government has funded or backed a wide range of initiatives designed to help firms keep their heads above the cold financial waters of Covid-19 Britain. These have included:Coronavirus Job Retention Scheme - Employers could furlough their employees, where the government paid most of their wages while they did no work. This helped protect the workforce of the future.



In addition to these measures, both national and local government have made other forms of finance available, including grants. The aim has been to help businesses keep going, in some measure, despite the challenges of the pandemic.

Recovery Loan Scheme to support businesses


The Recovery Loan Scheme is the latest in this series of initiatives to help businesses by providing access to working capital.

The scheme runs from 6 April to 31 December 2021. The financial support it provides comes in various forms, such as loans, overdraft facilities, asset finance and invoice finance. The amounts available can be as low as just £1,000 (through invoice or asset finance) up to £10 million.

To help give the lenders confidence in providing the funds, the government guarantees 80% of this finance. To help give businesses the confidence to borrow, no personal guarantees will be required on facilities up to £250,000. A borrower’s principal private residence is also protected from being used as security.

The Recovery Loan Scheme is open to all UK businesses that can show they have suffered negative impact from the coronavirus pandemic. It’s available to firms in almost every sector excluding banks, building societies, insurers and reinsurance. Companies in collective insolvency proceedings are also ineligible.


Recovery Loan Scheme key points


  • Open to businesses trading in the UK that have been impacted by the coronavirus pandemic.
  • Business must be viable, or would be if not for the pandemic, and not in collective insolvency proceedings.
  • Scheme runs 6 April 2021 to 31 December 2021.
  • Loans and other finance facilities available from £1,000 to £10 million.
  • Can be used for any legitimate business purpose.
  • Interest and fees will be charged.
  • No personal guarantees on facilities under £250,000.
  • Repayment term up to six years, depending on type of facility.


If your business has suffered in any way because of the coronavirus pandemic and would benefit from additional working capital, take a look at your options under the Recovery Loan Scheme.



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