Coronavirus Business Interruption Loan Scheme

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 up to £5 million for up to six years.

The scheme will be delivered through commercial lenders, backed by the UK 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 Government has extended 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.
The scheme is expected 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

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 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.

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.

Coronavirus Large Business Interruption Loan Scheme:

What is it?

The 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 between £45m and £250m. Firms with a turnover between £250m and £500m will be able to borrow up to £50m.

The scheme will be delivered through commercial lenders, backed by the British Business Bank. 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 are still expected to conduct their usual credit risk checks, but this scheme allows them to specifically support business that were viable before the COVID-19 outbreak but are facing significant cash flow difficulties, that would otherwise make their business unviable in the short term.

The new scheme will support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and assets finances. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.

Businesses remain responsible for repaying any facility they may takeout.

Am I eligible?

Your business must:

  1. Be UK-based in its business activity
  2. Have an annual turnover between £45 million and £500 million
  3. Be unable to secure regular commercial financing
  4. Have a borrowing proposal which the lender:
    1. would consider viable, were it not for the COVID-19 pandemic
    2. 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
  • Employer, professional, religious or political membership organisations
  • Trade unions

Facilities supported by the guarantee will be provided by participating commercial lenders. Once the scheme has launched, 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.

How do I access it?

The new scheme will launch later this month and will be available through a range of accredited lenders, which will be listed on the British Business Bank website.

Once the scheme has launched, 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.

When can I access it?

Further details of the scheme will be announced later this month.

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