COVID-19: The coronavirus business interruption loan scheme has been expanded for SME’s

by | Apr 6, 2020 | Blog

The Coronavirus Business Interruption Loan Scheme provides financial support to smaller businesses (SMEs) across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

The scheme is a part of a wider package of government support for UK businesses and employees. 

The Coronavirus Business Interruption Loan Scheme has been revamped with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the coronavirus crisis can access the funding they need.

Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for the scheme. Insufficient security is no longer a condition to access the scheme.

This significantly increases the number of businesses eligible for the scheme. The expanded scheme will be operational with lenders from Monday 6 April 2020.

How It Works

British Business Bank operates the Coronavirus Business Interruption Loan Scheme via its accredited lenders. There are over 40 of these lenders currently working to provide finance. They include: 

  • High-street banks
  • Challenger banks
  • Asset-based lenders
  • Smaller specialist local lenders

To view the list of accredited lenders, click here.

A lender can provide up to £5 million in the form of:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

The Coronavirus Business Interruption Loan Scheme gives the lender a government-backed guarantee for the loan repayments to encourage more lending.

The borrower remains fully liable for the debt.

Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

  • Recoveries under these are capped at a maximum of 20% of the outstanding balance of the Coronavirus Business Interruption Loan Scheme facility after the proceeds of business assets have been applied;
  • A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a Coronavirus Business Interruption Loan Scheme backed facility

How To Apply

The application process is quite straightforward and involves 3 steps. These are:  

  1. Find a Lender
  2. Approach a Lender
  3. Wait for the Lender to make a decision

There are however certain criteria that need to be considered when making an application. To be eligible, your business must:  

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19)

British Business Bank have created a quick eligibility checklist to make it easier to understand. To download a copy, click here

Businesses from any sector can apply, except for the following:

  • Banks, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • Further-education establishments, if they are grant-funded
  • State-funded primary and secondary schools.

For further information on how to apply, please click here or contact your Client Partner by calling 01454 619900.

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