The British Business Bank announces today that the third iteration of its Recovery Loan Scheme (RLS) has supported £1bn of finance offers to smaller businesses since its launch in August 2022.

The guarantee scheme, which has more than 60 participating lenders, has enabled lending to smaller businesses across the whole of the UK. Approximately two-thirds of facilities under the third phase of the scheme have been offered outside of London and the South-East.

The Recovery Loan Scheme has also supported a wide range of finance types including term loans, asset finance, invoice finance, and revolving credit facilities, and a new asset-based lending variant was recently launched.

The scheme has attracted a diverse range of lenders, including specialist and challenger banks, funds, community development finance institutions/social lenders, asset-backed and alternative finance providers, property and development finance providers, as well as the High Street banks.

More than half of the offered facilities were for growth capital for UK smaller businesses, with the majority of the remaining facilities for working capital.

Of the businesses supported, more than 90% had fewer than 50 employees.

Louis Taylor, Chief Executive, British Business Bank said: “This milestone is a fantastic achievement for the Bank and for all of the lenders participating in the Recovery Loan Scheme. It is good to see the diversity of lenders that have joined the scheme and the types of finance they’ve been able to offer, especially asset finance, which is so important to growing and innovating businesses. Direct loan guarantee schemes such as this are vital to ensuring the market serves the needs of smaller businesses across the UK.”

Kevin Hollinrake MP, Minister for Enterprise, Markets and Small Business said: “We’re backing businesses of all sizes and it’s fantastic that over £1 billion has now been delivered to support small businesses across the country who are at the heart of local economies and communities.

“The Recovery Loan Scheme was introduced to support SMEs to invest and grow, and through the British Business Bank we’re supporting entrepreneurs to scale up their ambitions”.

Martin McTague, National Chair of the Federation of Small Businesses, said: “Keeping finance flowing for small firms is vital to economic growth, and we’re pleased that the third phase of RLS has reached the £1bn mark. This shows its importance for the UK business ecosystem as a whole and underlines why its future financing must be confirmed by the Government as soon as possible.

“Helping start-ups get off the ground, and grow into scale-ups, is key in both the here-and-now and for the UK’s future prospects, especially in our current high interest rate environment. Having the scheme set up and ready to go will be invaluable in case of an economic slowdown, to ensure funding gets to firms as swiftly as possible.”

Theodora Hadjimichael, Chief Executive Officer, Responsible Finance said: “Wherever they live, entrepreneurs need the right finance at the right time to develop their businesses. The Recovery Loan Scheme has enabled Community Development Finance Institutions (CDFIs) to lend successfully to viable businesses unable to access the finance they need elsewhere. Over 90% of the businesses which borrowed from CDFIs last year had been turned down by another lender; 93% were based outside London, and half were based in the UK’s most disadvantaged areas – yet they have all had a “no” turned into a “yes” by a CDFI and the vast majority go on to thrive, repaying their loans and creating opportunities.

“The Recovery Loan Scheme is an essential tool to help CDFIs lend to underserved businesses and create banks’ future customers. It has enabled CDFIs to support hundreds of businesses and make almost £50m of lending, unlocking job creation and business growth across the UK. We’re delighted the Scheme has reached this milestone and look forward to continuing to back diverse and underserved businesses.”

Peter McIntyre, Head of Business Banking, HSBC UK said: “At HSBC UK we’re here to support our customers as they meet their ambitions to grow. We’re pleased to support The Recovery Loan scheme which has played a key role in getting finance to companies looking to a positive future after the challenges of recent years.”

Richard Davies, CEO at Allica Bank, said, “Over the past few years, the Recovery Loan Scheme has unlocked vital funding for UK businesses from lenders who otherwise wouldn’t have been able to help them.

“At Allica Bank, we are committed to supporting what we call ‘established businesses’, who are the backbone of the UK economy and our local communities. The Recovery Loan Scheme has been a core part of our lending proposition, allowing us to support even more of these kinds of businesses with their plans for growth.

“We’d like to congratulate the British Business Bank for making such an impact at what has been a truly challenging time for UK businesses.”

The Recovery Loan Scheme is a government-backed loan scheme designed to support access to finance for UK businesses as they look to invest and grow.

The scheme aims to help smaller businesses across the UK, with turnover of up to £45m, to access finance they may not have had access to commercially, on equivalent terms. Businesses can use the finance for any legitimate business purpose – including managing cash flow, investment in new equipment or vehicles, perhaps to support a transition toward net zero, and growth through new products or expansion. However, businesses must be able to afford to take out additional debt finance for these purposes.

It can support facility sizes of up to £2m for borrowers outside the scope of the Northern Ireland Protocol. Borrowers in the scope of the Northern Ireland Protocol may borrow up to £1m unless they operate in a sector where aid limits are reduced – in which case the maximum that can be borrowed is subject to a lower cap. These include agriculture, fisheries/aquaculture, and road freight haulage.

The first two phases of the scheme, designed to support access to finance and growth for UK businesses as they recovered from the Covid-19 pandemic, enabled £4.3bn of finance.

The British Business Bank intends to publish RLS 3 performance data in 2024, in line with the approach taken for other British Business Bank-managed schemes.