The pot of funding allocated by the government to see the UK through the coronavirus pandemic, has grown considerably and regularly over the last couple of months. Incorporating everything from loans to business grants and tax relief benefits, the UK government have channelled billions into various schemes – not least the provision of various loans across different industries and sectors.
Coronavirus Business Interruption Loan Scheme (CBILS)
The CBILS was announced to support small UK businesses by giving them access to direct financial support. The scheme was launched on 23rd March 2020.
Loans provided under the scheme state that repayment is not expected for the first 12 months, with no interest being accrued on the total loan during that time. Early repayment would not be subject to any fees.
- The business must be an SME with a turnover of less than £45 million
- The business must have a borrowing proposal which would be considered viable, were it not for the coronavirus pandemic
- The loan must be for business purposes only
CBILS loans are available for eligible businesses through approved lenders and banks, primarily focussing on high street banks. As part of its promise, the government stated that lenders would be provided with a guarantee of 80% on each loan, to help applications that would otherwise fail on security.
The loan scheme is delivered and backed by the British Business Bank.
Bounce Back Loan Scheme (BBLS)
The BBLS was launched in April 2020 and seeks to provide financial support to businesses which are losing revenue and profit due to the coronavirus. The scheme offers businesses between £2,000 and up to 25% of their annual turnover, with the maximum loan available sitting at £50,000.
- The business must be UK-based
- The business had to have been established prior to 1st March 2020
- The business has seen a negative impact due to the Coronavirus
Those not eligible include banks, state-funded primary and secondary schools, and public-sector bodies.
To apply for a BBLS loan, businesses should find one of the 11 lenders across the country partaking in the scheme, and submit an application. The lender is responsible for deciding if any business is eligible.
Paying back the government loans
The length of these two loans sits at 5 years and 6 years respectively, with no repayments due during the first 12 months. The government have also advised that any early repayments will be accepted without fee.
The government extended their loans to include emergency personal loans to those returning to the UK from abroad at the outbreak of Coronavirus, to ensure UK citizens were able to return home safely. This was available for application through the UK government website.
Banks and lenders who operate and manage other personal loans were issued guidance by the Financial Conduct Authority (FCA) which set out an expectation that lenders provide temporary exceptional and immediate support to any customers facing difficulty with repayments.
A full breakdown of the government support in light of the Coronavirus pandemic can be found here.