During the 2020 Budget which was held last week, the Chancellor announced that a ‘Coronavirus Business Interruption Loan Scheme’ would be available ‘over the coming weeks’. However, due to the rapidly changing circumstances surrounding Covid-19 it has now been announced that this will be brought forward and we can expect the new scheme to become available to SME’s in the week commencing 23rd March 2020.
The loan is to be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.
The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. NB – the borrower always remains 100% liable for the debt.
The maximum value of a loan provided under the scheme will be £5m (the original announcement suggested a maximum loan size of £1.2m).
The Government will also cover the first 6 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital.
As well as loans, there are many other types of finance supported by the programme, depending on the provider. You can find out what type of finance the British Business Banks partner page.
This measure is targeted towards SMEs. It is open to businesses with a turnover of less than £41m (as long as the business is long-term viable and is UK based) which meet the scheme’s eligibility criteria. Full details on the eligibility criteria will be announced shortly.
The British Business Bank Coronavirus Business Interruption Loan Scheme webpage has the latest source of information.
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