Emergency coronavirus loan scheme now open to UK businesses

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The Coronavirus Business Interruption Loan Scheme – a key part of the government’s economic efforts to support stricken businesses through the pandemic – is now operational.

Chancellor Rishi Sunak has announced an ‘unlimited’ pot of money will be available to support firms impacted by the outbreak, with many having been forced to close or cease production due to the outbreak.

Hospitality firms such as pubs, restaurants, gyms and cinemas have been told to close, while shops are struggling, flights are grounded and many manufacturers have either ordered a temporary close or even adjusted their operations to make ventilators to help medical efforts to support patients.

Sunak’s £330bn-and-counting aid package includes rate holidays, bridging grants, a government offer to cover 80% of workers’ pay, and the loan scheme, which is offering 12 months of interest-free packages of up to £5m for struggling smaller businesses.

Loans are being administered by the British Business Bank, and the system is accepting applications from today.

The bank said: “(The Coronavirus Business Interruption Loan Scheme – CBILS) is a new scheme, announced by the Chancellor at Budget 2020, that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

“CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance.

“The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. The borrower always remains 100% liable for the debt.”

Key features include government guarantees of up to 80%, zero fees for smaller businesses, and access to unsecured lending.

Firms can be eligible if they are based in the UK, have an annual turnover of no more than £45m, and have a borrowing proposal which would have been considered viable to the lender prior to the Covid-19 disruption.

There are 40 accredited lenders through which loans can be accessed, including well-known high street banks.

Eligible businesses can apply at www.british-business-bank.co.uk.

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