Coronavirus Business Interruption Loan Scheme - Update
It was announced on the 3rd of April 2020 that The Chancellor is to take further action to increase the support given to businesses under the Coronavirus Business Interruption Loan Scheme. The scheme is to be extended so that more businesses can benefit, and it is easier to apply and access essential funds during the current COVID-19 Crisis.
The following changes were announced:
The scheme is to be extended so that all small businesses will now be eligible to apply for funding not just those that are unable to secure regular commercial funding.
The Government has taken steps to prevent lenders form asking for personal guarantees for loans less than £250,000 and operational changes have been made to make the process easier and for approvals to be made quicker. The Government will still cover the first 12 months of lending fees and interest due on loans.
The loans will also not be a last resort for companies that are struggling during the COVID-19 outbreak but can now be applied for before all other sources of finance are considered.
For loans above the £250,000, personal guarantees that can be asked for will be limited to 20% of the value of the loan and lenders will be prevented from asking for directors to secure any finance by using their personal homes.
The Chancellor has also pledged to increase the number of official loan lenders to speed up the provision of loans. Digital Banks such as Starling are not on the approved lenders list now but are in the process of making an application to be approved so that their small business customers can access funding through the Starling Banking app.
Adding fintech companies such as Starling and Revolut will mean that smaller business how bank with them can access funds and it is essential to remove as much bureaucracy as possible during this time so smaller companies can access the funding they need to during the current crisis.