RLS update: What’s changed and what are the alternatives?

10 Jan 2022

If your business has been impacted by the coronavirus pandemic, you might be considering applying for finance through the Recovery Loan Scheme (RLS). On 1 January 2022, a few changes came into effect. Read on to find out what’s changed and how to apply.

Coffee shop

Designed as a follow-up to the CBILS and BBLS, the RLS was originally due to end on 31 December 2021. However, due to the ongoing impact of Covid-19 on businesses, an RLS extension was announced by the government in the 2021 Autumn Budget. 

Businesses now have until 30 June 2022 to apply. It’s important to note that as of this year, a few aspects of the scheme have changed. The scheme is now available to small and medium sized firms only, whereas last year it was open to all businesses.

The maximum amount a business can borrow has decreased from £10 million to £2 million, and the guarantee coverage provided by the government has been reduced from 80% to 70%. Aside from these details, most aspects of the RLS remain the same. 

As before, businesses can choose to receive their RLS funding in the form of a term loan, invoice finance, asset finance or a business overdraft. Interest is capped. 

How can I apply for a recovery loan?

To be eligible for RLS finance your business must be trading in the UK, be viable if it weren’t for the pandemic and have been impacted by the Covid-19 pandemic. 

Following the rise in Omicron variant cases, businesses across hospitality, leisure and a variety of other sectors may be looking for additional funding to navigate the winter months. RLS and finance aside, a number of grants are available.

In December 2021, the government announced a series of new measures to support businesses. These include £6,000 grants for hospitality businesses, the return of the statutory Sick Pay Rebate Scheme (SSPRS), £100 million for local authorities, and more. 

You can apply for RLS finance through the Funding Options platform. We’ve been chosen by the British Business Bank as a platform to find RLS and non-RLS finance for businesses.

Just tell us how much funding you require and what it's for. We’ll also need some basic details about your business. Based on the information you provide, our Funding Cloud will compare 120+ lenders and match your business with the right finance options for its needs.

A wealth of business finance options 

It’s important to know that the RLS isn’t the only funding option out there. Depending on your situation and goals, the Recovery Loan Scheme might not be a suitable route for your business. Let’s take a look at a few options on the finance market at the moment. 

Asset finance

Although asset finance is available through the RLS, it’s also obtainable outside of the scheme. Asset finance can be used to purchase or lease a piece of equipment, machinery or technology for your business, such as a vehicle, laptops or a coffee machine. 

Asset finance enables you to spread the cost of the purchase over a longer term. Depending on the type of asset finance you opt for, you can purchase the item outright at the end of the loan term, return it or upgrade to a newer model, depending on your needs. 

Invoice finance 

Non-RLS invoice finance is also available. Invoice finance lets you borrow money based on what your clients owe. So instead of having to wait weeks or months to get paid, which can wreak havoc with your cash flow, you can access most of the funds within 48 hours.

After you’ve invoiced your clients or customers, you give the invoice details to your finance provider and they pay you an agreed percentage, for example 70%. When the client finally pays you’ll receive the rest of the funds minus any finance provider fees.

Revolving credit facility

As one of the most flexible types of business finance out there today, revolving credit facilities work by providing you with access funds as and when you need them, and you only pay interest when you use your facility. As with a credit card, you’ll be assigned a limit. 

 eCommerce finance

 Ecommerce finance is designed for business owners who want to accelerate the growth of their company. It can be used to fund marketing efforts, pay rent or staff wages, and more. Different types of trade finance are also available if you import goods from abroad, helping you navigate any supply chain challenges you’re experiencing at the moment. 

 Merchant cash advance

 You could be eligible for a merchant cash advance if your business involves taking customer card payments. A merchant cash advance is for firms that take customer payments, such as retailers and hospitality businesses. It works by you borrowing a sum and paying it back – plus interest – through your customer card payments. 

 It’s flexible because you pay the money back according to how much trade you’re doing at any given time, so you pay more when you make more and vice versa. It differs from a traditional term loan, where you pay the same amount each month regardless of trade.

 Start your funding journey today if you’re interested in applying for RLS finance or want to explore other options from across 120+ lenders.

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Simon Cureton

Chief Executive Officer

Simon has been Chief Executive Officer at Funding Options since 2019, spearheading its transformation into a leading fintech with the launch of its Funding Cloud platform. Simon has over 27 years of experience in financial services, having held senior posts at some of the biggest players in the industry all over the world.

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