What is the Coronavirus Business Interruption Loan Scheme?

Definition of Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme is a temporary measure that aims to help UK businesses access bank loans, overdrafts, invoice finance and asset finance during the Covid-19 pandemic.

Backed by the British Business Bank, the scheme was announced in the March 2020 Budget and will be delivered through commercial lenders.

The scheme provides businesses with a turnover of less than £45 million with secure access to bank loans, overdrafts, asset finance and invoice finance up to the value of £5 million, for up to six years. In September 2020 the Chancellor announced that lenders could extend this period to 10 years. Larger businesses with a turnover of between £45 million and £500 million may access loans of up to £25 million under the scheme.

The UK government will make a payment to cover any fees from lenders and the first 12 months of interest payments. This allows smaller businesses to avoid upfront costs and make lower initial repayments.

Through the Coronavirus Business Interruption Loan Scheme the UK government will provide a guarantee of 80% on each loan free of charge, subject to certain conditions and restrictions.

Under the scheme, directors of limited companies should not be asked to provide a personal guarantee against the loan if they are borrowing less than £250,000.

There are a large number of accredited lenders that can deliver the Coronavirus Business Interruption Loan Scheme, including all the major banks.

The Coronavirus Business Interruption Scheme will temporarily replace the Enterprise Finance Guarantee.

Who is eligible for the scheme?

A business is eligible for the scheme if it is both:

  • UK based, with a turnover less than £500 million per year
  • qualified through the British Business Bank’s eligibility criteria

Qualifying businesses may apply for the scheme regardless of whether they have previously been refused a loan from another finance provider.

How to apply for the scheme

Business owners who wish to apply for the Coronavirus Business Interruption Loan Scheme should contact either their own bank or another accredited lender.

To learn more about what the coronavirus crisis could mean for your business and to stay up to date with the latest news, take a look at our small business coronavirus hub.

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