RLS (Recovery Loan Scheme)
RLS launched in 2021 as the bridge from Covid-era support schemes into a more permanent partial-guarantee programme. Successive iterations have adjusted the headline cap and guarantee percentage — the current scheme provides a 70 per cent Government guarantee on facilities up to £2 million per business, with lenders pricing the loans at their normal commercial rates.
Unlike BBLS and CBILS, RLS does not subsidise the borrower's interest payments. The Government guarantee is paid for by an arrangement fee from the lender to British Business Bank and is reflected in the lender's risk appetite rather than in cheaper headline pricing. RLS facilities can be term loans, overdrafts, asset finance or invoice finance, depending on the accredited lender.
Eligibility requires the business to be UK-based, have generated more than 50 per cent of income from trading, and be viable in the lender's view but for the requested finance. The lender runs its standard underwriting; the Government guarantee sits behind that decision rather than replacing it. Personal guarantees can be required by the lender, but no PG is permitted on RLS facilities up to £250,000.
Worked example
How the numbers play out
A wholesaler applies for a £400,000 three-year RLS term loan with an accredited lender. The lender prices the loan at 11 per cent APR and takes a debenture plus a limited director PG. The Government guarantees 70 per cent of the facility to the lender, which helps the lender extend a larger amount than it would on a fully commercial basis.
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