Coronavirus: Support With Cashflow
- Bounce Back Loans
- Coronavirus Business Interruption Loan scheme
- Coronavirus Large Business Interruption Loan Scheme
- Covid-19 Corporate Financing Facility
The Government has announced that new “Bounce Back Loans” will be available for SMEs to apply for from Monday, 4th May at 9am.
- businesses will be able to borrow up to 25% of their turnover, between £2,000 and £50,000
- loans will be interest free for the first 12 months, and will be 100% guaranteed by the government
- the online application form will be short and simple with cash available within days
Changes to Bounce Back Loans
The Guidance on Bounce back Loans has been updated to people to top up existing loans, extend the loan period, make interest-only repayments, or pause repayments. Specifically:
- If you already have a Bounce Back Loan but borrowed less than you were entitled to, from 10 November you can top up your existing loan to your maximum amount. You must request the top-up by 31 January 2021.
Also, before your first repayment is due, your lender will contact you about further options to:
- extend the term of your loan to 10 years
- move to interest-only repayments for a period of 6 months (you can use this option up to 3 times)
- pause your repayments for a period of 6 months if you have already made at least 6 repayments (you can use this option once)
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The Government have launched a new temporary scheme delivered by the British Business Bank through your current business bank for loans between £1,000 - £5million. It will launch on 23rd March 2020 to support access bank lending and overdrafts.
- 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 businesses up to 250 employees.
- The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
- Businesses can access the first 12 months of that finance interest-free, as the government will cover the first 12 months of interest payments
- To be eligible for support via CBILS, the small business must
- Be UK based, with turnover of no more than £45 million per annum
- Operate within an eligible industrial sector – This includes tourism and hospitality businesses
- Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
- Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
- 40 major banks will offer the scheme. You should talk to your bank as soon as possible to discuss your business plan.
- If you have an existing loan, you may want to ask for a repayment holiday to help with cash flow.
The new Large Business Loan Scheme will ensure that larger firms are able to access loans with a government guarantee of 80%. Loans of up to £25 million will be available through participating banks for eligible businesses.
- To be eligible, your business must:
- be UK-based in its business activity
- have an annual turnover between £45 million and £500 million
- 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
To support larger firms, the Bank of England has announced a new lending facility to provide a quick and cost-effective way to raise working capital via the purchase of short-term debt. This will support companies which are fundamentally strong but have been affected by a short-term funding squeeze, enabling them to continue financing their short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.
Further details, including on how to access this funding will follow in the coming days, and the scheme will be available from the week commencing 23rd March.