Welcome changes to the Coronavirus Business Interruption Loan Scheme
- 3rd April 2020
The Government is revamping the Emergency Business Loan scheme amid criticism of the banks who have been accused or ‘taking advantage of the crisis’ according to media reports.
The Treasury have revealed that more than 130,000 loan enquiries had been received but less than 1,000 had been approved.
The Coronavirus Business Interruption Loan Scheme is available to businesses with turnover under £45 million and allows them to access government-backed loans of up to £5 million.
The changes to the Coronavirus Business Interruption Loan Scheme will make it easier for businesses to access loans. The changes should mean that more businesses can access the financial support they so desperately need.
The key change is that businesses will no longer need to have first tried to get a normal commercial loan, opening up the scheme to businesses other than those who have been refused a loan on commercial terms. This will likely mean that all lending to the smaller businesses will be through the scheme and we can expect large volumes of applications for the interest-free loans.
Banks can only ask for personal guarantees on the 20% of loans over £250,000 not supported by the Government Scheme.
These changes should allow more businesses to access these Government backed loans.
The Treasury, however, have not yet put in place any restrictions on the interest rates that banks can charge for these loans.
Help for large businesses
The Government announced a new initiative to support businesses with turnover between £45 million and £500 million.
This scheme will allow these large businesses to borrow up to £25 million and these loans will largely be guaranteed by the Government.
The banks have also been told they cannot demand company owners to guarantee loans with their own personal savings or property on loans up to £250,000.
It is important to remember, these are still loans and businesses will be 100% liable for the debt.
Do talk to our specialist business advisers for any support with regards to cashflow planning and business strategy and contingency plans.
All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.