A lack of awareness surrounding the potential of the Government-backed Recovery Loan Scheme (RLS) may be holding businesses back from accessing a critical source of funding for growth, according to Allica Bank, the digital relationship bank dedicated to serving established British businesses.

Its latest survey of commercial mortgage brokers found that almost a third (32%) do not know that the RLS is still available for banks to use and fewer than a third (30%) have recommended RLS-backed loans to clients within the last six months.

Some 30% of brokers surveyed have not recommended RLS-backed loans to clients because they admit to not knowing enough about the scheme.

Part of the reluctance seems to stem from a fundamental lack of understanding of what kinds of businesses could be eligible for the scheme. Notably, a quarter (25%) of brokers have not recommended an RLS-backed loan to clients because they believed it could be only used for business recovery.

While this was initially the intention of the Scheme when it was launched by the British Business Bank during the COVID-19 pandemic, the latest iteration has removed any mention of a business needing to be in recovery from its eligibility criteria. Instead, the British Business Bank says the scheme is now geared towards supporting businesses as they look to invest and grow.

David Holdstock, Government Lending Manager at Allica, says the RLS remains a big opportunity for business growth: “The RLS allows Allica to support businesses with loans that would otherwise fall outside of our usual credit appetite. It’s a fantastic opportunity for brokers to help their clients access funding that they otherwise may not have been able to.

“Due to the name of the scheme, there’s an understandable misapprehension that it can only be used to support businesses in recovery but this is no longer the case. That’s why we’re trying to raise awareness among our broker community about its many use cases. It’s a brilliant initiative from the British Business Bank that’s not had as much uptake as we would have expected, which is disappointing given the current economic environment.”

To be eligible for the RLS, a business must be UK-based and have group turnover of up to £45 million. The latest iteration will run until 30 June 2024. You can find out more about the Recovery Loan Scheme at www.british-business-bank.co.uk/ourpartners/recovery-loan-scheme/