Recovery Loan Scheme

The Recovery Loan Scheme (RLS) is available to support UK Businesses who have been affected by coronavirus (Covid19).

At a glance – RLS with HSBC:

  • No personal guarantees required in connection with loans of less than £300,000.

    Existing business assets may be taken to secure a Recovery Loan Scheme facility.

    There is no fee required for the Government guarantee.

    The Recovery Loan Scheme is open to existing and new customers.

    The scheme launched on 6 April 2021 and is open until 31 December 2021, subject to review.

  • The following fixed interest rates will apply to all loans between £25,001 and £299,999:

    • 4.49% for loans up to and including 3 years
    • 4.99% for all loans over 3 years

    You will be liable for 100% of any facility that may be provided, and that HSBC will always seek to recover the outstanding balance of any facility from you and the proceeds of any security you, or any security provider on your behalf, has given for the loan.

  • The following variable interest rates, with an option to fix, will apply to all loans between £300,000 and £2,999,999:

    • 3.75% over Bank of England Base Rate3 for loans up to and including 3 years
    • 3.99% over Bank of England Base Rate3 for all loans over 3 years

    A negotiated margin over Bank of England Base Rate,3 applies to all loans between £3,000,000 and £10,000,000.

     

  • A Government guarantee which secures bank loans to any viable business with a sound borrowing proposal.

    The RLS can be used where we would either:

    • not have been prepared to offer a Commercial Facility for the same amount on similar terms; or
    • would only have been prepared to offer a Commercial Facility on similar terms at a higher price.
  • Any UK business can apply for a Recovery Loan between £25,001 to £10m subject to eligibility and viability assessments.

    Loan Term up to a maximum of 6 Years.

  • No loan arrangement fees up to £2,999,999. There are no prepayment fees on fixed rate loans up to £299,999, should you wish to repay early.

    Variable and fixed interest repayment options available, subject to amount borrowed and loan term.

Apply for Recovery Loan Scheme

Key Benefits

Businesses that have received support under the existing Government Covid19 guaranteed loan schemes will still be eligible to access finance under this scheme, subject to eligibility and limitations.
Funding to support your business recover from the impact of Covid19 and accelerate growth.
Capital Repayment Holidays available on a Recovery Loan where needed, subject to an assessment.

Quick Check RLS Eligibility Criteria

  1. Is your business based in the UK?
  2. Will the funding you require be used to support business activity within the UK?
  3. Is over 50% of your business turnover generated from trading activity*1?
  4. Has your business been impacted by Covid19?
  5. Do you operate in an eligible sector*2?
  6. Is the amount you require to borrow between £25,001 and £10,000,000?
  7. Is funding required for 6 years or less?
  8. You must pass certain insolvency and financial difficulty tests stipulated by subsidy control requirements and the EU State aid rules (which apply to businesses within the scope of the Northern Ireland Protocol).
  9. You understand that you will be liable for 100% of any facility that may be provided, and that HSBC will always seek to recover the outstanding balance of any facility from you and the proceeds of any security you, or any security provider on your behalf, has given for the loan.
  10. An RLS facility of under £30,000 must not be used in support of export related activities.

1 “Trading Activity” means any trading or commercial activity that generates turnover (whether or not such activity is carried on with the intention of making a profit).

2The following trades and organisations are not eligible to apply: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state funded primary and secondary schools.

3 Variable debit interest is payable on your loan and tracks the Bank of England Base Rate. If the Bank of England Base Rate falls below zero, we will treat it as zero.

 

Important Information

  • You are liable for repaying 100% of the loan and HSBC will always seek to recover the outstanding balance from you and any security you, or any security provider on your behalf, has taken under the loan.
  • No personal guarantees required in connection with loans of less than £300,000.
  • For lending of £300,000 or more we will review security requirements on an individual basis. If a personal guarantee is deemed appropriate, it will be taken for a maximum of 10% of the loan amount we agree with you.
  • It is not necessary for you to hold a Business Current Account with us in order to apply for or maintain this loan, unless we are seeking a debenture or fixed charge over book and other debts as security for the loan.
  • Businesses that have taken out a CBILS, CLBILS or BBLS facility are able to access the new scheme although the amount they have borrowed under a previous scheme may in certain circumstances limit the amount they may borrow under RLS.

Next Steps

To Apply for RLS, Click Here

All applications need to be submitted through our Recovery Loan Scheme portal.

Application information provided will be assessed and we may ask you to provide further information to support request.

To complete the application, you will need the following information:

  • Current company information
  • Loan amount
  • Details of the impact of Covid19 to your business
  • Annual accounts (where applicable) for 2019, 2020
  • 12 months forecast turnover

We may be required to ask additional questions if you fall under Northern Ireland Protocol.

Recovery Loan Scheme FAQS

General Information

What is the Recovery Loan Scheme (‘RLS’)?

The Recovery Loan Scheme (RLS) is designed to support UK businesses that have been impacted by Covid19 and is to aid UK Economic recovery throughout 2021. Requests for funding under the scheme are required to demonstrate the impact of Covid19 on their business, confirm viability and affordability of all borrowing in line with our standard credit assessment.

Please be aware that you’re liable for the entire loan amount. We’ll seek to recover the outstanding balance of your loan from you, as well as the proceeds of any security you, or any security provider on your behalf, has given for the loan. Only after this will we look to realise the government guarantee.

 

How long will the RLS be available for?

RLS will be available from 6th April 2021 until 31st December 2021, subject to review.

 

Can I still obtain a BBL, CBIL or CLBIL?

No, these schemes closed on 31st March 2021.

Guarantees and Payments

Will I have to provide a personal guarantee or my home as security?

  • No personal guarantees to be taken on facilities up to £300,000.
  • For lending of £300,000 or more we will review security requirements on an individual basis. If a personal guarantee is deemed appropriate, it will be taken for a maximum of 10% of the loan amount we agree with you.
  • Regardless of the size of the loan, a personal guarantor’s principal private residence will not be used as security for a RLS facility.
  • You do not need to open a bank account to obtain a Recovery Loan or maintain your loan with HSBC, unless we are seeking a debenture or fixed charge over book and other debts as security for the loan.

If your business is experiencing financial difficulty, please review www.business.hsbc.uk/en-gb/financial-difficulty and contact us to discuss how we may be able to help.

 

Can I request an Interest or Capital Holiday?

Interest is payable upon drawdown and must be serviced by the borrower.

Capital Repayment Holidays are available subject to our usual credit assessment, purpose for the request and viability.

Eligibility

What are the eligibility criteria?

Please see the ‘Quick check RLS eligibility criteria’ section on this page.

 

Am I guaranteed to be eligible for a Recovery Loan?

Unfortunately, we can’t guarantee that you’ll be eligible.

You must be an existing HSBC business customer or complete our on boarding procedures so we can provide your loan.

You must meet the scheme rules which are set out in the eligibility criteria here.

You must be able to demonstrate the impact of Covid19 on your business and viability to meet the repayments of business liabilities.

 

Do I need to provide evidence that I have a viable business?

Yes. You must show in your borrowing proposal that your business will generate sufficient income to meet the repayments of the business liabilities.

You must also self-certify that your business has been adversely impacted by the Covid19 outbreak.

We will then assess your borrowing proposal using our normal lending criteria.

 

I have had de minimis aid in the past, can I still get a loan?

Yes, as long as you meet the scheme's eligibility criteria. Any previous de minimis state aid does not impact your eligibility for RLS and does not need to be taken into account. There is no interaction between any de minimis state aid previously received by a business and the size of the RLS facility they can access, should they be eligible.

 

What sectors are ineligible for RLS?

The following trades and organisations are not eligible to apply: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state funded primary and secondary schools.

 

What percentage of my annual turnover must be generated by trading activities to be eligible for RLS?

You must be generating more than 50% of your income from trading activity. RLS is not designed to support shell companies or investment companies. Trading Activity is defined as any activity that generates turnover (whether or not such activity is carried on with the intention of making a profit).

 

Is there a maximum turnover?

There are no maximum turnover restrictions under RLS.

 

Are there any limitations?

The maximum loan available is £10m (no turnover restriction). However, if you are a ‘group’ the maximum amount per group is £30m.

RLS is limited to 2 x annual wage bill for 2019, or the latest available year; 25% of 2019 turnover, or justified liquidity need for the next 18 months (It is recommended to provide a detailed forecast to support liquidity requirements).

The maximum amount of a Recovery Loan is after the deduction of any existing CBIL, CLBIL (not intended to be repaid).

 

How should I calculate trading activity and turnover for start ups?

For start-ups, or SMEs which have traded for less than 12 months, you should estimate this based upon your business forecasted turnover for the first 12 months of trading.

 

Are there any sector specific considerations that I need to consider when applying for a loan?

Sector specific considerations are applicable when considering whether your business is within scope of the Northern Ireland Protocol. These apply to businesses active in the agriculture and fisheries sectors.

Undertaking In Difficulty

What type of businesses will be captured by the “Undertaking in Difficulty” definitions?

If you fall within the definition of a Micro or Small Enterprise, you will be required to meet certain criteria to be eligible for the Scheme. A Micro or Small Enterprise has fewer than 50 employees and less than £9m in annual turnover or annual balance sheet. To be eligible for the Scheme as a Micro or Small Enterprise, you must not be (i) subject to collective insolvency proceedings or (ii) in receipt of rescue aid (which has not been repaid) or restructuring aid (and still subject to a restructuring plan).

You would be considered an Undertaking in Difficulty at the relevant time if you are not a Micro or Small Enterprise and:

  • you are a limited liability company (but not an SME* that has been in existence for less than 3 years) and have accumulated losses greater than half of your subscribed share capital (including any share premium);
  • you are a company where at least some members have unlimited liability for the debt of your company (but not an SME* that has been in existence for less than 3 years) and have accumulated losses greater than half of your capital (as shown in your company accounts);
  • you are subject to a winding up order (by or subject to the supervision of a court), a voluntary liquidation (with confirmation by the court), an administration, a voluntary arrangement or sequestration or bankruptcy or, under English law, you fulfil the criteria to be placed in any such insolvency proceedings;
  • you are in receipt of rescue aid and have not reimbursed any loan or terminated any guarantee received as part of this rescue aid;
  • you are receiving restructuring aid and are subject to a restructuring plan; or
  • if you are not an SME, your book debt to equity ratio has been greater than 7.5:1 and your EBITDA interest coverage ratio has been below 1:1 as confirmed by the last two sets of annual accounts published prior to the relevant test date(s). You must meet both of these tests in both years to be considered an “Undertaking in Difficulty” for the purposes of the date in respect of which the test is being carried out.

*You will be an SME if:

  • you are an enterprise (being any entity engaged in an economic activity (i.e. the sale of products or services)); and
  • you employ fewer than 250 persons; and
  • either (i) your annual turnover does not exceed EUR 50m or (ii) your annual balance sheet total does not exceed EUR 43m.

You can exceed the thresholds set out in 2 and 3 above in exceptional years and still retain your SME status but, if you exceed either of them for 2 consecutive accounting periods then you will lose your SME status.

A newly incorporated enterprise that does not have annual accounts should make a bona fide estimate of its turnover/balance sheet total.

 

What is the relevant test date(s) at which the “Undertaking in Difficulty” test should be assessed?

In assessing whether you meet the insolvency ratios, you should first identify whether the business is an “Undertaking in Difficulty” as at the date of your application, using the two sets of annual accounts most recently published prior to that date.

You should confirm that the financial position of the business on the date of your application is unlikely to have materially changed since the relevant annual accounts. If, for example, there was a major equity injection after the annual accounts date but prior to the date of application, interim or management accounts may be used. This would normally be accompanied by an auditor’s or accountant’s letter verifying the situation.

If the business is not an “Undertaking in Difficulty” as at the date of your application, there is no requirement to conduct the test in relation to any other date(s) or period(s).

If the business is confirmed to be an “Undertaking in Difficulty” as at the date of your application, you will also need to determine if the business would have been considered an “Undertaking in Difficulty” as at 31 December 2019.

If the business is an “Undertaking in Difficulty” at the date of your application, but it was not an “Undertaking in Difficulty” as at 31 December 2019, it will (in principle) be eligible for the Scheme.

If the business is an “Undertaking in Difficulty” at the date of your application, and was already an “Undertaking in Difficulty” on 31 December 2019, it will not be eligible for the Scheme.

Application Information

Where do I go to apply for the RLS?

You can apply online by using our RLS application portal. Please review all of the information on the portal and upload the required documents to assist us with your borrowing request.

 

How quickly are these loans approved?

RLS loans will be assessed through our normal credit assessment process. Where approved, and if terms and conditions are satisfied, we will endeavour to make the loan available for drawdown as soon as possible.

The Recovery Loan Scheme is managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA. Visit http://www.british-business-bank.co.uk/recovery-loan-scheme.

Important Information

Apply for Recovery Loan Scheme

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