Recovery Loan Scheme (RLS)

About The Scheme

Launched on 6 April 2021, the Recovery Loan Scheme (RLS) provides financial support to businesses across the UK as they recover and grow following the coronavirus pandemic.

You can apply to the scheme if Covid-19 has affected your business. You can use the finance for any legitimate business purpose – including managing cash-flow, investment and growth. However, you must be able to afford to take out additional debt finance for these purposes.

If your business has already borrowed from any of the other coronavirus loan schemes – namely:

  • the Bounce Back Loan Scheme (BBLS)
  • the Coronavirus Business Interruption Loan Scheme (CBILS)
  • the Coronavirus Large Business Interruption Loan Scheme (CLBILS)

RLS is still open to you, although the amount you have borrowed under an existing scheme may in certain circumstances limit the amount you may borrow under RLS.

RLS will run until 31 December 2021, subject to review.

How it works


The Recovery Loan Scheme will initially be available through a number of Lenders accredited by the British Business Bank. New lenders under the scheme will be listed on the British Business Bank website as they become accredited.

A key aim of the Recovery Loan Scheme is to improve the terms on offer to you, but if a lender can offer you the choice of a commercial loan on better terms, without requiring the guarantee provided by the RLS, they should do so.

It is advised that when looking to borrow, you should first approach your own finance provider. You may also consider approaching other lenders if you’re unable to access the finance you need. There are also experienced and knowledgeable brokers such as Orchard Business Finance who can help you navigate this process.

Types of finance

A lender can provide up to £10 million as one of the following facilities:

  • Term loan
  • Overdraft
  • Invoice finance
  • Asset finance


RLS gives the lender a government-backed guarantee against the outstanding balance of the facility. As the borrower, you are always 100% liable for the debt.

If you’re borrowing £250,000 or less

  • The lender won’t take any form of personal guarantee.

If you’re borrowing more than £250,000

  • The lender has the discretion to decide whether to take personal guarantees. However:
  • Above £250,000, the maximum amount that can be covered under RLS is capped at a maximum of 20% of the outstanding balance of the RLS facility after the proceeds of business assets have been applied
  • No personal guarantees can be held over Principal Private Residences.

How Much Can You Borrow

Working Out the Maximum You Can Apply For…

i. 2 x Annual wage bill as evidenced by 2019 Accounts. (Where the case of wage undertakings created on or after 1 January 2019, the maximum loan must not exceed the estimated annual wage bill for the first two years in operation).

ii. 25% of 2019 turnover as evidenced by 2019 Accounts.

iii. Estimation of Working Capital/Investment costs required for the forthcoming 18 months. (if your business employs over 250 employees, then this is only required for the forthcoming 12 months)

When calculating these figures, it is the smallest amount that you can apply for. As an example:

XYZ Ltd have an annual wage bill of £65,000 (2 x £65,000 = £130,000)
Annual turnover for XYZ Ltd in 2019 Accounts is £400,000 (25% = £100,000)
Estimated working capital/investment costs required = £250,000

In this example, the MAXIMUM that ABC Ltd could apply for under the Recovery Loan Scheme is £100,000


For further information and an informal conversation phone today on 01257 543013.

Coronavirus Business Interruption Loan Scheme (CBILS) – Extended

What Is CBILS?

On 17th December 202, the Government has announced that the Coronavirus Business Interruption Loan Scheme (CBILS) will be extended until 31 March 2021.

The scheme was set up by the Government in conjunction with the British Business Bank and is supported by High Street Lenders, Specialist Lenders, Asset Lenders and Challenger Banks. There are currently over 100 hundred accredited lenders approved to offer CBILS. All loans are Government backed and guaranteed up to 80% of the facility value to encourage more lending.

CBILS provides financial support to UK businesses that are experiencing cash flow disruption or are loosing income as a result of the COVID-19 outbreak.

Since it’s launch during Lockdown 1.0.  CBILS has been expanded with significant changes to the scheme’s eligibility criteria and features. As a result even more business impacted by coronavirus and those that didn’t previously  qualify can access the funding they require.

Key Features

  • £5m Loan Facility: The maximum value of a facility provided under the scheme will be up to £5m.
  • Finance Terms: For Term Loans and Asset Finance Facilities are 6 years.  With Overdrafts and Invoice Finance Facilities the finance terms is 3 years.
  • Personal Guarantees: Are not required for facilities under £250,000 and are at lender discretion above this amount. A PG will exclude principle private residence and will be capped at 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.  Insufficient security is no longer a condition to access CBILS.
  • 80% Guarantee: The government provides the lender with a partial guarantee of 80% against the outstanding facility balance. The borrower remains 100% liable for the debt.
  • No Guarantee Fees For Business: There are no guarantee fees for SMEs. Lenders pay a fee to access the scheme
  • Interest And Fees Paid By Government For 12 Months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges.
  • Not Limited To One Application: The scheme allows you to make multiple CBILS applications subject to meeting lender underwriting criteria and responsible lending requirements. Therefore it is possible to apply for a Term Loan and separately Asset Finance or any other combination.


To be eligible for a CBILS facility…

  • The business must be UK based in its business activity.
  • Have an annual turnover of no more than £45 million.
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic.
  • Self-certify that it has been adversely impacted by the coronavirus.

CBILS Deals We’ve Placed For Clients

  1. Haulage Company – Invoice Finance Facility with a Term Loan added to support cash flow and growth.
  2. Construction Company – Multiple Asset Fiance Facilities to purchase plant and equipment.
  3. Manufacturing Company – Term Loan to consolidate existing high interest unsecured business loans.
  4. Recruitment Company – Overdraft and Invoice Finance Facility to smooth out cash flow peaks and troughs.

For an informal discussion in confidence call Orchard Business Finance on 01257 543013.

Case Study – Business Finance Restructure


We were approached by the owners of a family run Construction and Property Development Company.  They had a Business Finance Loan Secured against their residential property, on a second charge basis. The loan term had expired and they were unable to repay the loan. The loan needed to be restructured and funded by an alternative lender before possession proceedings commenced.


The number of Lenders that would refinance the existing facility was limited for a number of reasons including clients age; refinance of existing business finance facility is outside underwriting criteria; poor company accounts; lack of equity in property; uncertainty about repayment strategy; not willing to offer facility secured against residential property. There were other issues that also needed to be taken into account.  Including a Floating Charge that had been registered by a Development Finance Company.  And demonstrating that the clients company was viable going forward despite the impact of Brexit and Covid19.

Proposed Solutions

Over a period of two weeks we worked with the clients to generate financial information, including cash flow forecast, profit and loss analysis and business plans. So that we could demonstrate to lenders that the company was viable going forward and that the clients were reputable and upstanding.

The funding options considered included cash flow finance which is very similar to an overdraft facility. However with the level of funding required at £320,000 it would have proven expensive and put our clients in a difficult financial position both short and long term. Unsecured Business Loans were also researched but due to poor accounts, turnover levels and low profit margins this option was not viable. The existing lender was approached with a view to extending the facility or restructuring but this request was refused. We also considered re-mortgaging the residential property but this wasn’t viable due to clients age and level of  borrowing required.


Following considerable research and conversations with Lenders.  We agreed the refinance with a short-term bridging lender. This lender was prepared to refinance the full amount and take a second charge against the clients residential property. Although the rates were not the most competitive at 1.35%/m serviced monthly and a 3% lender arrangement fee. This new facility has resolved our clients problems and gives them enough time to complete development projects that have been delayed due to Brexit and Covid19.

Case Study – Confidential Invoice Discounting – Food Manufacturer

Established specialist food manufacturing company that had recently won several new contracts with multiple retailers.  Approached Orchard Business Finance for advice on how to take pressure off their cash flow and smooth out monthly peaks and troughs.

The company turnover stood at around £6 million and staffing levels fluctuated between twenty and forty staff dependent on the season.  Although the company had no financial problems there was borrowing in the form of Unsecured Business Loans and Asset Finance.  As a result, lenders approached direct by the Directors weren’t prepared to offer any further funding facilities.

We sat down with the Directors and talked through all aspects of their business and the pressures being experienced along with future growth plans and their requirements to grow the business. It became apparent very quickly that the cash flow problems were being caused.  As the result of average customer contracted payment terms being 77 days; purchase ledger showing average payments being made on 98 days; and three crunch payment dates during the month with the first being lenders payments, the second supplier payments and finally payroll.

The Directors recognised that average payments of 98 days were the main cause of the cash flow peaks and troughs.  Most importantly and despite the company being financially stable and having good contracts the Directors realised that they were financially vulnerable if they couldn’t smooth out the peaks and troughs.

As a solution we suggested Confidential Invoice Discounting as this would enable the Directors to drawdown up to 85% of the invoice value within 24 hours of it being issued. There was a level of reluctance initially as the Directors considered CID to be an expensive form of Invoice Finance. Once we explained how a CID facility operates and that it only becomes expensive if it’s used irresponsibly the Directors decided to proceed.

One of our trusted lenders offered this food manufacturing company a Confidential Invoice Discounting facility that allowed them to drawdown up to 85% of the invoice value and agreed a facility of £500,000 which also included payment protection and Director personal guarantees that were restricted.

Following a review with the Directors they are happy with the facility as they can now manage monthly supplier, finance and payroll payments with confidence. Additionally, they have been able to confidently approach other retailers and expand distribution of their product.

Case Study – Prospect House – Development Finance Joint Venture Partnership

One of our long-standing clients Gary Morton at Morton Group Ltd approached ourselves to assist in raising finance to purchase the former Council Offices known as Prospect House in the Northumberland market town of Hexham. The long-term vision that Gary and his Team had for this site was to develop the Listed Building into residential properties consisting on a town house, four cottages and eleven apartments.

As a result of the development having no planning permission for a residential development it restricted the number of lenders that would provide funding at the required loan to value. We therefore introduced Gary to into one of our equity partners. This partner was prepared to lend funds on a short-term basis to allow the purchase of the site. Thus, enabling our clients to then complete the planning application and obtain planning approval for their development.

Prior to planning permission being granted we had discussions with Development Finance Lenders and Joint Venture Partners about refinancing the site and providing ongoing development finance.  Several development finance lenders were interested in supporting the scheme. However, on this occasion our clients decided to work with a Joint Venture Partner.

There are pro’s and con’s to working with a joint venture partner and it’s vitally important that all parties feel that they can work together on a project. On this occasion the partnership was a good fit as the JV Partner loved the property and location; liked the Morton Group Management Team; and the scheme was also commercially viable for all involved.

Upon planning permission being granted the JV Partner introduced their finance allowing the removal of the equity partner and redevelopment to commence.

We all look forward to seeing this completed development.

Property Development Funding Options

Despite everything that’s currently going on in the world and the battering that the UK economy is taking. June 2020 was a busy month for Development Finance Loan enquiries.

What’s been particularly interesting is the mixture of Property Developers that have approached Orchard Business Finance to assist them in raising finance to purchase and develop residential sites.

We are seeing a lot of new entrants into the market who are looking to purchase property at Auction or are canvassing their local areas for properties prior to them being listed by estate agents. The focus of these Developers is to purchase properties under market value, complete renovations and sell the property.  The financing requirements vary significantly dependent on the funds that the Developers have available. However, we are seeing funding requirements that range from £45,000 to £135,000 plus additional funds to complete a refurbishment. In most cases we’ve looked at bridging finance to help secure the property and additional funds. It’s not always possible to raise 100% funding but in certain circumstances this has been possible. To achieve 100% funding the lenders will use other security and, in some circumstances, lend against the market value of the property and not the purchase price.

More established Property Developers are looking at stepping up their activities and taking on larger schemes and ground up developments. The developments being presented to us have land/property purchase prices of circ. £500,000 and the development costs range from £500,000 to £1,500,000 including costs. These Developers in many cases don’t have assets of a high enough value to offer up as additional security or available cash reserves to offer a deposit of 30% to 35% on the land/property purchase. As a result, the traditional Development Finance Lenders find these schemes unattractive as the financial risk profile is to high.  That doesn’t mean to say that these schemes can’t be funded, they can via a Joint Venture Partner. A Joint Venture Partner will introduce up to 100% of the land/property purchase price and development costs but they do like to see some ‘skin in the game’ from the Developer. Therefore, you might need to introduce 10% of the costs or offer some additional security. A Joint Venture Partner will normally charge interest on the funds that they introduce in the same way that a lender would. Then on completion of the development any profit that is made from the sale of the development will be split with the Joint Venture Partner.

Established Property Developers are approaching us with some fantastic schemes that include luxury apartment developments in city centers through to multi property housing developments. These developments require significant funding and in most cases these Developers have funds that they can introduce therefore de-risking the scheme for the lender. The lenders that we are approaching to fund these schemes include High Street Lenders and Specialist Lenders who are comfortable funding such schemes.

Spotlight On – Selective Invoice Finance

What is Selective Invoice Finance?

Selective invoice finance is an alternative to more traditional invoice finance where you must process all invoices through the facility.  This type of invoice finance facility is also known as single or spot factoring.  Selective invoice finance enables businesses to release funds tied up in individual unpaid invoices. By using the facility on an invoice to invoice basis, you are able to access funds quickly when and as cash injections are required.

How does it work?

It’s fairly straight forward and simple. The first step is to identify the invoice or invoices you wish to factor. Approval is then required for factoring the chosen invoices and the finance provider will confirm the fee. Dependent on your business sector you can receive up to 95% of the value of the invoice. The funds are normally available within 24 hours of invoice submission.  The invoice balance less the lenders fee is paid when the customers pays the invoice in full.

What are the differences between Spot, Single and Selective Invoice Finance?

There is no difference, all these terms are used to describe Selective Invoice Finance.

What are the advantages?

Selective Invoice Finance is often used to support cash flow at key points during the month. For example, to meet payroll and supplier payments. It can also be used for the purchase of business assets or just used to smooth out cash flow peak and troughs. The funds are available quickly and you are not tied into a twelve-month contract as with more traditional Invoice Finance.

What are the disadvantages?

It can be more expensive than traditional Invoice Finance Facilities where you are tied into a twelve- month contract and must process all sales invoices through the facility.

What businesses qualify?

This varies from lender to lender but normally all trading styles qualify although there are often requirements for a minimum level of turnover or projected turnover.

Can I apply with bad credit?

You can apply with bad credit but will still need to satisfy lenders underwriting criteria.

Development Finance – Case Study


Clients approached Orchard Business Finance on a Saturday morning informing us that they required a bridging loan or development finance to purchase a derelict residential property at auction the following Tuesday. This was no ordinary property, it had an interesting history and was being sold under the Proceeds of Crime Act 2002.

The guide price was £480,000 and the clients, due to time scales hadn’t conducted any of the due diligence that we would recommend when attending an auction. Including obtaining an independent valuation report; completion of structural surveys; legal searches; obtaining refurbishment/development costings; speaking with an architect; speaking with local estate agents to obtain comparable selling prices.

As a result there where lot’s of unknowns with this property and to make the situation more complicated the clients also required Planning Permission for one of their potential development schemes.


We needed to produce a professional lending proposal that would be acceptable to potential lenders. This proposal need to include…

Financial Information

  • Build Costs
  • Professional Fees
  • Contingencies
  • Financial Appraisal
  • Cash Flows
  • Client Funds Available

Client Backgrounds

  • CV
  • Examples of Previous Developments
  • Credit History
  • Asset & Liability Statement (personal & business)
  • Details of Professional Team (solicitors, accountant, QS, architect, construction company)

Purchase Property 

  • History
  • Overview of Development
  • Structural Concerns/Issues
  • Planning Permission – What is Allowed

Funding Requirements

  • Funding Required for Purchase
  • Funding Required for Development Expenses
  • Exit Strategy

All this information was collated over the weekend and signed off by clients for presentation to lenders on the Monday morning.

Due to covid-19, remote working and current economic climate we approached an number of lenders initially by phone and then followed up with the lending proposal. It was explained that a quick yes or no funding decision was required along with level of funding that would be made available if the lender was happy to support the deal.


As a result of the well presented lending proposal and credibility of the clients five lenders agreed to fund the purchase of the property. This allowed us to present the clients with a number of funding options, this helped them make an informed decision on how to proceed at auction.

The clients were able to attend the auction knowing the upper limit that they could bid for the property along with the financial implications of bidding over this limit. Sadly the clients were outbid by £5,000 as they had set an upper limit of £500,000.

On this occasion the client couldn’t proceed but I know that we have provided these clients with the highest levels of service and advice. This will ultimately result in them asking ourselves to help with any future development finance requirements.


If you are a property developer or prospective developer and would appreciate professional guidance and assistance in raising funds contact Orchard Business Finance on 01257 543013.


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