Business Loans for Companies and Businesses During The Coronavirus Crisis

Written by Robert Moore Marketing Manager 19 May 2020

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Business Loans for Companies and Businesses During The Coronavirus Crisis

Through this period of disruption, the Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses. Find out more about some of the key loans being offered here.

Coronavirus Business Interruption Loan Scheme (CBILS):

The Scheme provides facilities of up to £5m for SMEs who are experiencing cashflow issues as a result of the pandemic and up to £50m (£200m as of 26 May) for firms with revenues between £45m and £500m (Coronavirus Large Business Interruption Loan Scheme).

CBILS will be available for most business finance products such as;

  • term loans,
  • overdrafts,
  • invoice finance
  • asset finance.

The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. 

CBILS: KEY FEATURES

  • Up to £5m facility repayable over a period of up to 6 years (SMES) or £50m (£200m as of 26 May) for larger businesses
  • 80% guarantee to the Lender
  • Interest and fees paid by Government for 12 months
  • Overdrafts and Invoice Finance for 3 years
  • Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
  • When borrowing up to £250,000, a personal guarantee is not required
  • Companies taking out these loans are 100% liable for the debt and there are no restrictions on the interest rates banks charge

Please note: This scheme is just one of a number of measures announced by Government and you can find full details of the temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19 here.

Am I eligible for this loan?

Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, the SME must:

  • Be UK-based in its business activity, with annual turnover of up to £45m (or up to £500m to be eligible for the Coronavirus Larger Business Interruption Loan Scheme)
  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

How do I access this finance?

The loans are available through the lenders accredited by the British Business Bank, you can see a list of them here.

Initially, businesses should approach their own lender preferably via their website as call centres are likely to be very busy. There is no problem if they want to access alternative finance providers but of course they will need to treat you as a new customer which may mean more paperwork etc.

The COVID-19 Corporate Financing Facility

This scheme allows the Bank of England to buy short term debt from larger companies.

It supports companies which have been affected by short-term funding squeezes, allowing you to finance your short-term liabilities. It also supports corporate financial markets, aiming to ease the supply of credit to firms.

To find out more about this scheme including the eligibility criteria and how to access it, visit the Bank of England's website.

Bounce Back Loans

Small businesses can now benefit from a fast track finance scheme, announced by the Chancellor. This adds to the already existing packages of support offered to small businesses affected by this coronavirus pandemic, including the £6 billion awarded in business grants, 4 million jobs saved through the job retention scheme and generous tax deferrals supporting hundreds of thousands of firms.

Businesses are able to borrow between £2,000 and £50,000, accessing the cash within days. The loans will be interest free for the first 12 months and have a 100% government-backed guarantee for lenders. To apply for these loans, businesses must do so online via a short, simple form. Applications open on 4 May. Loans will be accessible through a network of accredited lenders.

The idea of this loan is to ensure small companies are protected and can access finance immediately when needed to ensure they can survive the pandemic. Small businesses are vital in the community and our economy.

The government will work closely with lenders to make sure the loans being delivered are advanced as quick as possible and terms are agreed for a low standardised level of interest for the time after the first 12 months of the loan is complete.

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