What is it?
The temporary Coronavirus Business Interruption Loan Scheme will support small and medium-sized businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years.
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 pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the Government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major banks.
Am I eligible?
You are eligible for the scheme if:
- your business is UK based, with turnover of no more than £45 million per year
- your business meets the other British Business Bank eligibility criteria
How do I access it?
To apply, you should talk to your bank or one of the 40 accredited finance providers offering the scheme (and not the British Business Bank) as soon as possible to discuss your business plan with them.
You can find out the latest on the best ways to contact them via their websites. Please note that branches may currently be shut down to enable social distancing.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.
If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
Update: 23rd March 2020
Source: British Business Bank
The full list of participating banks (40 as of today) is available here: Accredited Lenders & Partners. If you already bank with any of them, that will be your strongest opportunity for fast funds (as they already know you).
Given there is likely to be a big demand for facilities once the scheme goes live, we ask you to please
- 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 enquires due to social distancing
- Consider the urgency of your need – it is possible that some businesses may be looking for regular longer-term finance rather than ‘emergency’ finance, and there may other businesses with a more urgent need to speak with a lender
Generally-speaking, the fastest (and cheapest) finance available is through factoring your debtor book, so it might be worth asking for a dual quote. Note that factoring is faster (and more likely to be approved) as it is based on the collective credit ratings of your clients, rather than your own one.