This is a developing article that will be updated regularly. Last updated 20 March 2020, 5:30pm
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COVID-19 (Coronavirus) Business Interruption Loan Scheme
On 17th March 2020, the Chancellor Rishi Sunak announced further measures to support the economy. He said COVID-19 is “a public health emergency but also an economic emergency”, “will do whatever it takes” and “will go much further in the coming days”.
A key measure included the launch of COVID-19 (Coronavirus) Business Interruption Loan Scheme.
The Chancellor confirmed between £1,000 to £5 million will be available for SMEs via the COVID-19 (Coronavirus) Business Interruption Loan Scheme from 23rd March 2020.
The loan will now be interest free for the first 12 months (government will cover the first 12 months of interest payments) and can be applied for via over 40 accredited lenders including the big four banks — Barclays, HSBC, Lloyds and RBS.
It is our understanding that the Business Interruption Loan Scheme will be available for viable businesses with a turnover under £41 million, but are unable to obtain finance due to having insufficient security to meet the lender’s normal requirements. Businesses must prove that were it not for the COVID-19 pandemic, the business would be viable.
We believe if the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
Government guarantee to cover 80%, with the banks retaining residual 20% risk. Banks may therefore request Personal Guarantees (PGs) on this proportion.
Almost all business sectors are eligible, however there are a small number of excluded/restricted sectors.
If you are thinking of applying, it would be wise to have the following information ready:-
- Cash flow statement showing the impact of COVID-19 over the next 3-6 months,
- Latest year end accounts,
- Latest management accounts (full P&L and Balance Sheet).
HOW TO APPLY FOR THE BUSINESS INTERRUPTION LOAN SCHEME
The Business Interruption Loan Scheme is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.
In the first instance, businesses should approach their own provider – ideally via the lender’s website or email to the Relationship Manager.
Further information to be released shortly…
FURTHER COVID-19 INFORMATION
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The government has classed the CBILS and the Bounce Back Loan as ‘Notified State Aid’ (NSA) under the European Commission’s new Temporary Framework for COVID-19. If a company receives CBILS or the Bounce Back Loan, then it will not be possible to claim SME R&D Tax Relief for that project as a company can only be in receipt of one form of NSA on any one project.
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