Coronavirus Business Loans

There are two government backed loan schemes which have been provided to assist businesses through the cash flow challenges of the Coronavirus pandemic. These are the Bounce Back Loan (BBL) and the Coronavirus Business Interruption Loan Scheme (CBILS).

The schemes will close to new applications at the end of November 2020.

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.

The majority of banks are not offering the lending to new customers which has been a challenge for businesses who have day to day banking with a bank not offering the scheme.

HSBC and Starling Bank have been open to new customers however there has been mixed reviews on customer service and timings due to the pressure placed on the banks by the number of business enquiries.

Businesses which have difficult cash flow and struggle to make the monthly repayments can choose to make interest only payments for six months and those “in real trouble” can apply to suspend repayments altogether for six months.

If you require finance for your business as a result of the coronavirus pandemic and require assistance with making an application, or understanding which loan scheme you should apply under, please get in touch and one of our team will help on 01228 904 904.

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