What is it?
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.
Am I eligible?
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
Businesses from any sector can apply, except the following:
- Banks and building societies
- Insurers and reinsurers (but not insurance brokers)
- Public-sector organisations, including state-funded primary and secondary schools
Facilities supported by the guarantee will be provided by participating commercial lenders. Businesses should check the British Business Bank website to find out which lenders are able to provide the type of finance they are looking for. They should then approach a lender or lenders as they would normally. Individual lending decisions are at the discretion of these accredited lenders, and businesses will remain responsible for repaying any facility that they take out.
Businesses with a turnover above £45m may be entitled to other government support, more information about these schemes is available here.
How do I access it?
You should apply via your lender’s website or through one of the 40 accredited finance providers offering the scheme. The lender has the authority to decide whether to offer you finance.
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.
Given there is likely to be a big demand for facilities, businesses should consider applying via the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to social distancing.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.
When can I access it?
The scheme is now open for applications.
Businesses can apply now for finance through accredited lenders, a list of which can be found here.