Coronavirus – Business Interruption Loan Scheme
The government has launched a new, temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, to support businesses to support primarily small and medium-sized businesses to access bank lending and overdrafts.
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 not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
You are eligible for the scheme if: your business is UK based, with turnover of no more than £45 million per year and your business meets the other British Business Bank eligibility criteria.
Lenders are banned from requesting personal guarantees on loans under £250,000. For loans over £250,000 personal guarantees will be limited to 20% of any amount outstanding on the Coronavirus Business Interruption Loan Scheme lending after any other amounts have been recovered from business assets.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme. There are 40 accredited providers in all.
Support for larger firm
Under the COVID-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All UK businesses are eligible.
The Coronavirus Large Business Interruption Loan Scheme will be made available to enable banks to make loans of up to £25m (the present limit for the smaller scheme is £5m). This will allow firms with an annual turnover of between £45m and £500m access to the 80% government guarantee.
Veracity are here and available to help you and your businesses through this extremely challenging period.