Coronavirus Business Interruption Loan Scheme 03/04/2020
As you may have heard, the Government has relaxed some of the rules around the already announced loan scheme to make it easier for small businesses to obtain loans.
The Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses, with an annual turnover of up to £45m, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years.
The scheme will be delivered through commercial lenders, backed by the Government-owned British Business Bank. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will also make a Business Interruption Payment to cover the first 12 months of interest payment and any lender-levied fees, so businesses will benefit from no upfront costs and lower initial repayments.
In response to feedback received since the schemes launch, the Chancellor is taking further action by extending the scheme so that all viable small businesses affected by Covid-19, and not just those unable to secure regular commercial financing, will now be eligible. This change is designed to enable all long-term viable businesses experiencing difficulties as a result of the coronavirus outbreak to access finance.
There are 40 accredited lenders able to offer the scheme, including all the major banks.
We expect the scheme to run for an initial period of 6 months. There is no limit on the capacity of the scheme.
Your business must:
1. Be UK-based in its business activity
2. Have an annual turnover of no more than £45 million
3. Have a borrowing proposal which the lender:
a) would consider viable, were it not for the COVID-19 pandemic
b) believes will enable you to trade out of any short-term to medium-term difficulty
Personal guarantees are not required to secure lending below £250,000. For any borrowing above £250,000 personal guarantees will be capped at 20% of the outstanding value of the loan, as the Government is providing the guarantee for the remaining 80% of the finance. This will apply to all customers that have secured a loan under the scheme since its launch on 23rd March.
Please visit www.businesssupport.gov.uk for more details
We’re trying to answer some common questions regarding the various Government Business Support packages over the coming days, and will start with the Job Retention Scheme.