SMEs: Coronavirus Business Interruption Loan Scheme

Fri, 03/27/2020 - 10:04 | billie@innov8gd.com

  • A new Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank.
  • This is aimed at small and medium-sized businesses to access bank lending and overdrafts.
  • The scheme is covered by the government and 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 not charge businesses or banks for this guarantee and the Scheme will support loans of up to £5 million in value.
  • The scheme will be open for six months with loan terms of up to 3 years.
  • Businesses are liable for 100% of the loans they receive, the government are providing a guarantee for 80%.
  • Businesses can access the first twelve months of that finance interest-free, as the government will cover the first twelve months of interest payments.
  • To be eligible businesses must:
    • Be UK based with annual turnover of up to £45 million.
    • Generate more than 50% of their turnover from trading activity.
    • Have a borrowing proposal which would, were it not for COVID-19, be considered viable by the lender to enable your business to trade out of any short-to-medium term difficulties.

The scheme became available from 23 March 2020. Details of the first set of lenders providing access to the scheme can be found here. Terms are being set by individual lenders.

More details will be announced in the coming days. Businesses are advised to approach their existing lender and to apply through the lender's own website in the first instance. They can then try other lenders if their own lender cannnot help.