For further information on the “Coronavirus Bounce Back Loan” scheme, business finance or other ways that we may be able to assist your business during the COVID-19 crisis, please email company and commercial specialist, Frank Scott-Ashe, to arrange an initial, informal chat. |
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Government guaranteed loans
A new fast-track finance scheme has been announced by the chancellor whereby small businesses will be able to access loans of between £2,000 and £50,000 backed by a 100% guarantee from the Government. This was due to mounting concerns that many small businesses could fold as urgently needed funds were not being paid out fast enough through the existing CBILS scheme to businesses suffering as a result of the pandemic.
As at 21st April, lenders had approved loans to 16,600 SME’s under the CBILS scheme providing £2.8 billion of funding according to UK Finance (the trade association for the UK banking and financial services sector). This new measure, the “Coronavirus Bounce Back Loan” scheme is due to be launched on 4th May.
The move has been welcomed by business leaders (including the Federation of Small Businesses and British Chambers of Commerce) as well as the major lenders.
Who is eligible?
The scheme is aimed at smaller businesses, including sole traders, micro-businesses and entrepreneurs, although the exact details as to who is eligible have yet to be published.
How will it work?
The Government will provide the lender with a 100% guarantee where the business defaults on the loan and the lender has recovered as much as it can from the business (we expect the lender to have an obligation to recover from the business however the Government has not yet confirmed this).
The Government will cover any fees and interest payable during the first 12 months of the loan following which a standardised low rate of interest is expected to apply for the remainder of the term.
The business can apply for a loan of up to 25% of their annual turnover.
In most cases, successful applications will receive their loan within 24 hours of approval.
How to apply
A short and simple form will be required to apply (expected to be a 2 page self-certification form). The business will simply have to prove that they were viable before the coronavirus outbreak and will not have to show that they will be viable afterwards.
The scheme will be made available by a network of accredited lenders approved by the British Bank. Those accredited to lend under the existing CBILS scheme will be able to apply for accreditation.