COVID-19 business loans schemes

5 May 2020 Eamonn McKee    Last updated: 5 May 2020

The Government announced two Loan Schemes, both delivered by the British Business Bank to provide funding for organisations.

Coronavirus Business Interruption Loan Schemes

The scheme has a requirement that 50% of the applicant’s income must be derived from its Trading Activity – however, following lobbying registered charities are excluded from this requirement. Charities are in principle eligible if they satisfy the other eligibility criteria of the Scheme.

The Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses to access loans and other kinds of finance up to £5 million. For businesses with an annual turnover of up to £45 million.

The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.

Additionally, the Government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to small and medium-sized businesses.

Coronavirus Bounce Back Loan Scheme

The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000. (capped at 25% of turnover).

The Government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.

Loan terms will be up to 6 years, with no repayments due during the first 12 months. The Government will work with lenders to agree a low rate of interest for the remaining period of the loan (capped at 2.5%).

Details of how to find a lender and apply for the schemes can be found on the British Business Bank website.

The British Business Bank has published FAQs that also compares the scheme to the Coronavirus Business Interruption Loan Scheme.

 

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