Coronavirus Business Loans

Last updated: 5 April 2021

The Bounce Back Loan Scheme and Coronavirus Business Interruption Loan Schemes were closed for new claims from 31 March 2021. However additional flexibility has been added to the original loans to assist businesses with their repayment.

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 (you can use this option once).

A summary of the schemes are detailed below:

Bounce Back Loan (BBL)

Coronavirus Business Interruption Loan Scheme (CBILS)

The Bounce Back Loan Scheme is a government initiative to support small and medium-sized businesses. The government provides lenders with a guarantee for 100% of the loan.

Key points regarding the loan scheme:

  • Borrow from £2,000 up to £50,000 up to a maximum of 25% of your turnover
  • Fixed 6 year loan term, with no early repayment fees if you wish to repay the loan early. This has been extended from 6 to 10 years following a government announcement on 24 September 2020. Thus reducing the monthly repayments.
  • Interest rate is 2.5% fixed
  • 12 month capital repayment holiday is automatically applied at the start of the loan (this may mean you pay more interest over the term). However, you can choose to make repayments at any time
  • Interest for the first 12 months is paid by the government, and then by you for the remainder of the loan term
  • Personal guarantee is not required 

The BBL has been exceptionally quick and easy for small business to access however is only available with a select number of banks. To apply visit your banks website and complete an online form (it takes around 20 minutes to complete).

The Coronavirus Business Interruption Loan Scheme (CBILS) is a government initiative to support small and medium-sized businesses. The government provides banks with a guarantee for 80% of qualifying loans.

Key points regarding the loan scheme:

  • Borrow from £50,001 up to £5m
  • Loan terms up to 6 years with fixed and variable interest rates available. This has been extended from 6 to 10 years following a government announcement on 24 September 2020. Thus reducing the monthly repayments.
  • 12 month capital repayment holiday is automatically applied at the start of the loan (this may mean you pay more interest over the term)
  • Interest for the first 12 months is paid by the government, and then by you for the remainder of the loan term
  • Choose to make repayments at any time with no early repayment fee

Loan finance backed by the CBILS has been generally difficult to access. The process to apply for the loan follows the normal loan review process meaning many business applications were being rejected due to uncertainty about their futures and affordability.

A detailed business cash flow forecast is required accompanying the loan application for banks to review the application in detail.

Recovery loan schemes

A recovery loan scheme has been introduced to ensure businesses can access loans and other finance of up to £10m per business on closure of the BBL and CBILS loan schemes.

The Government guarantees 80% of the finance to the lender. The scheme launched on 6 April 2021 and is open until 31 December 2021. Finance terms are up to six years for term loans and asset finance facilities and up to three years for overdrafts and invoice finance facilities.

No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.

Businesses that have received support under existing COVID-19 guaranteed loan schemes will be eligible to access this scheme.

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