Recovery Loan Scheme (RLS), historical reference and refinance routing
The Recovery Loan Scheme ran from 6 April 2021 to 30 June 2024 across three phases, providing a 70 to 80% government guarantee on facilities of £25,001 to £2 million per UK business, administered by the British Business Bank. The scheme is now closed to new applications but many businesses are still repaying RLS facilities and the routing for refinance into the current Growth Guarantee Scheme matters for live cashflow decisions.
The 3 RLS phases
| Phase | Window | Guarantee | Notes |
|---|---|---|---|
| Phase 1 | 6 Apr 2021 to 31 Dec 2021 | 80% to the lender | Direct successor to CBILS; same underwriting model, softer credit policy possible due to higher guarantee. |
| Phase 2 | 1 Jan 2022 to 30 Jun 2022 | 70% | Guarantee stepped down to bring scheme more in line with longer-term subsidy intentions. |
| Phase 3 | 1 Aug 2022 to 30 Jun 2024 | 70% | Expanded product types and accredited lender list. Closed to new applications on the published end date. |
If you have an active RLS facility
Three routing scenarios matter for businesses still repaying RLS facilities in 2026:
- Healthy trading, scheduled repayments on track. Continue as-is. Approaching the end of the RLS term, the natural refinance is into a Growth Guarantee Scheme facility with the same or different accredited lender, sized to match the residual plus any working-capital top-up.
- Trading strengthened, want to consolidate. Refinance into a single commercial facility (with or without GGS support) at a tighter rate. Common with Allica Bank, OakNorth, and high-street challengers; the file looks clean and the new lender accepts the RLS payoff as part of drawdown.
- Trading weakened, struggling on RLS repayments. Talk to the original lender first about forbearance under their RLS forbearance policy. If forbearance is exhausted and the issue is solvency rather than cashflow, talk to a licensed insolvency practitioner before applying for more debt. The post-decline matcher handles credit-issue routing if the underlying business is sound but the file needs work.
FAQs
Is the Recovery Loan Scheme still open?
No. The Recovery Loan Scheme (RLS) closed to new applications on 30 June 2024. It was succeeded by the Growth Guarantee Scheme (GGS), which opened 1 July 2024 and now runs to 31 March 2030. Any business that took an RLS facility before 30 June 2024 continues to repay under the original terms; the scheme closure only stopped new applications.
What was the Recovery Loan Scheme?
RLS was a UK government-backed lending scheme run by the British Business Bank, providing accredited UK lenders with a partial government guarantee on facilities of £25,001 to £2 million per business. Three iterations ran across three phases: Phase 1 (6 April 2021 to 31 December 2021) carried an 80% guarantee, Phase 2 (1 January 2022 to 30 June 2022) reduced to 70%, and Phase 3 (1 August 2022 to 30 June 2024) extended product types but kept the 70% guarantee.
Why did the scheme exist?
RLS was designed to keep credit flowing to UK SMEs after the original COVID schemes (CBILS, BBLS) closed in March 2021. The narrative pivot was from emergency liquidity to recovery and growth, hence the rebrand. The 70% guarantee softened lender credit policy at the margin, particularly for sub-2-year trading businesses and those with weaker asset cover than mainstream lending would normally accept.
Can I refinance my existing Recovery Loan Scheme facility?
Yes, with caveats. Refinancing an RLS facility into a new commercial facility is straightforward if your trading position has strengthened and the new lender is comfortable with the residual balance. The most common route is consolidation into a Growth Guarantee Scheme facility with the same or different accredited lender. Refinancing into an unsecured commercial loan is also viable for clean files. Refinancing into an MCA or asset finance route depends on the underlying need and your card flow or asset cover.
Does an outstanding RLS balance affect new credit applications?
Yes, materially. New lenders treat an outstanding RLS facility as committed debt and price it into the affordability assessment. If your monthly RLS repayment is meaningful relative to net profit, expect lenders to either offer a smaller new facility or decline pending an RLS settlement plan. A clean track record on the RLS (no missed payments) actually helps; missed payments or formal forbearance discussions on the RLS hurt the new application materially.
What is the difference between RLS and the Growth Guarantee Scheme?
Three changes: (1) Growth Guarantee Scheme guarantees 70% (same as RLS Phase 2 and 3), (2) ticket cap is £2m per business in both, (3) eligibility widens slightly on GGS to include not-for-profits and adjusts the turnover ceiling. The main practical difference is the marketing narrative: RLS was "recovery from COVID," GGS is "growth." For lender underwriting, the scheme rules are very similar.
I missed payments on my Recovery Loan Scheme facility, what now?
The 70% government guarantee is to the lender, not to you. Missed payments are pursued by the lender first under their normal collections process. You remain liable for the full debt including any director personal guarantee. The lender may agree forbearance (interest-only periods, term extension, repayment holiday) under their RLS forbearance policy. If forbearance fails and the lender claims on the government guarantee, the British Business Bank pays the lender 70% of the outstanding balance; the lender pursues you for the remaining 30% via normal recoveries and the 70% claimed back from BBB is then pursued by HMRC as Crown debt.
I was declined for the Recovery Loan Scheme, where else can I look now?
RLS declines were usually one of three reasons: (1) the lender's own credit policy on top of the scheme rules (the scheme is a guarantee, not a relaxation of credit standards), (2) sub-2-year trading without the asset cover or card flow to compensate, (3) sector exclusion (gambling, adult, regulated financial services). Each route has different alternatives now: for credit declines, the post-decline matcher routes to specialist lenders. For trading-time declines, fintech lenders (iwoca, Capify, Liberis) engage from 12 months. Use the FundBiz eligibility checker for routing.
To explore refinance options for an active RLS facility, use the eligibility checker. Limited companies, LLPs and partnerships of 4+ only.