CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The temporary Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million in value and for up to 6 years. There is now no requirement for Personal Guarantees for loans under £250,000, however, above £250,000 personal guarantees may still be required, at a lender’s discretion.
The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
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.
This scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
You are eligible for the scheme if:
- Your business is UK based, with turnover of no more than £45 million per annum.
- Your business meets the other British Business Bank eligibility criteria.
You need to show that your business:
- would be viable were it not for the pandemic
- has been adversely impacted by the coronavirus
If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019.
Who cannot apply
Businesses from any sector can apply, except:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
How long the loan is for
The maximum length of the facility depends on the type of finance you apply for and will be:
- up to 3 years for overdrafts and invoice finance facilities
- up to 6 years, for loans and asset finance facilities
How to access the scheme
The scheme is now open for applications. All major banks are offering this scheme.
To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. Please note that branches may be currently shut down to enable social distancing.
If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.
Support for large businesses through the Coronavirus Large Business Interruption Loan Scheme
***Latest update 19th May 2020***
The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80% to enable banks to make loans of up to £25M to firms with an annual turnover of more than £45M and financing up to £50M for firms with a turnover of more than £250M.
This will give banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.
We expect the scheme to be delivered through commercial lenders. The government will provide lenders with an 80% guarantee on individual loans for businesses that would be otherwise unable to access the finance they need.
Lenders will still be expected to conduct their usual credit risk checks. This scheme allows lenders to specifically support businesses that were viable before the COVID-19 outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.
The new scheme will launch later this month and will support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and asset finance.
Businesses would remain responsible for repaying any facility they may takeout.
To be eligible for the scheme your business must:
- be UK based, with turnover of between £45 million to £500 million per annum.
- be unable to secure regular commercial financing
- have a borrowing proposal which the lender:
- would consider viable, were it not for the COVID-19 pandemic;
- believes will enable you to trade out of any short-term to medium-term difficulty.
Businesses from any sector can apply, except for the following:
- banks and building societies
- insurers and reinsurers (but not insurance brokers)
- public-sector organisations, including state-funded primary and secondary schools
How to access the scheme
The new scheme will launch later this month. We anticipate it will be available through a range of accredited lenders.
[Updated 19th May 2020]