Recovery Loan Scheme mythbuster – 5 myths debunked

26 May 2021

The Recovery Loan Scheme (RLS) is the latest iteration of government-supported business lending. In this article, we uncover some of the myths surrounding the RLS and share what we know so far about the scheme.


The RLS, which replaced previous government loans such as CBILS, CLBILS and BBLS, launched on 6 April 2021 and is the latest government scheme designed to provide financial support to businesses impacted by the coronavirus pandemic. 

Businesses who receive RLS finance can use the money for any legitimate purpose, including managing cash flow, buying stock or funding business growth. 

It’s taken a while for the details to emerge, but we can now confirm that some of our lender panel are now accredited for the scheme, and you are now able to apply for funding.


RLS key details at a glance 

  • Businesses can borrow up to £10m (£30m per group) through term loans, overdrafts, invoice finance and asset finance

  • RLS invoice finance and asset finance facilities start at £1,000; term loans and business overdrafts start at £25,001

  • Terms range from 3 months to 6 years for term loans and asset finance; and 3 months to 3 years for business overdrafts and invoice finance

  • No personal guarantees are required for RLS facilities totaling £250k or less (if more, lenders request a personal guarantee, but Principal Private Residences are exempt).

Although there are a couple of similarities between the previous CBILS and RLS, there are a handful of differences, and a few misconceptions about the scheme are circulating. 

Myth 1 – All CBILS lenders are accredited for RLS

This isn’t true. Lenders have to go through a separate accreditation process to be able to deliver the RLS and some CBILS lenders may decide not to lend through the RLS. 

The British Business Bank is currently prioritising high street lenders for accreditation. 

Given the losses banks have incurred from the Bounce Back Loan scheme, it’s likely that their criteria for the RLS will be very stringent with a lower approval rate.

Banks will only be providing finance to their existing customer base. However, a number of non-bank lenders will also be accredited for the scheme. Some of our lenders are now accredited for the scheme and you are now able to apply for RLS funding for your business.

Myth 2 – RLS interest rates are the same as the CBILS 

RLS interest rates don’t mirror CBILS interest rates. Importantly, businesses will have to foot the bill for all fees and interest from day one. (This differs from the CBILS where the Government covered the first 12 months of fees and interest.)

Interest rates etc. will differ from lender to lender, however we do know that the annual effective rate of interest, upfront fee and other fees can’t be more than 14.99%.

Myth 3 – I can’t apply for an RLS loan if I received a CBILS loan

This is untrue. 

Businesses can apply for the RLS even if they already have a CBILS loan. However, the amount on offer may be limited for businesses that already have a CBILS or CLBILS facility. 

Myth 4 – I can’t get an RLS loan if my CBILS application was declined

The underwriting criteria for the new scheme is likely to resemble that of the CBILS, so businesses that were declined for the previous scheme might experience a similar outcome.

That said, a previous rejection doesn’t mean the business can’t apply again. 

Lenders review applications on a case-by-case basis and a business may have a better chance of getting approved with one lender over another, depending on their circumstances.

Myth 5 – The RLS is only for well-established businesses

 The RLS is open to businesses of every shape and size, across all sectors. There’s no minimum annual turnover and no minimum trading history. Eligibility criteria does apply though.

Eligibility at a glance

  • Businesses must carry out it trading activity in the UK

  • Applicants must show that their business is viable (or would have been) if it weren’t for the pandemic. Because of the uncertainty of COVID-19, lenders may disregard short to medium-term concerns over performance

  • Lenders will need confirmation that the business has been adversely affected by the coronavirus pandemic

  • Lenders must undertake credit and fraud checks for applicants, though these checks may vary depending on the lender in question 

  • Businesses in collective insolvency proceedings aren’t eligible.

How can I access RLS support for my business?

We are excited to announce that some of the lenders on our panel are now accredited for the RLS, meaning you can now apply for funding for your business needs.

If you have any questions about the scheme, or want to get started with your application feel free to get in touch with a member of the Funding Options team for the latest information. With a panel of 120+ lenders, compare and choose the right loan for you.

See what your business could be eligible for today.

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Funding Options
Funding Options

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