The new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, has been launched to support primarily small and medium-sized businesses to 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 SMEs. 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 government will cover the first 12 months of interest payments and any lender-levied fees, so businesses will benefit from no upfront costs and lower initial repayments.
You are eligible for the scheme if: your business is UK based, with turnover of no more than £45 million per year and your business meets the other British Business Bank eligibility criteria.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
On 3 April 2020, the Chancellor announced some changes to the scheme in order to make it easier for businesses to access the scheme. This includes making the scheme accessible to all viable small businesses not just those unable to secure regular commercial financing and confirmation that for loans up to £250,000 no personal guarantees are required. For loans over £250,000 any personal guarantee will be capped at 20% of the outstanding value of the loan.