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Loans and other methods of finance

The Government has announced a raft of business assistance to help companies large and small.

The Coronavirus Business Interruption Loan Scheme (CBILS) is available to UK-based Small Medium Enterprise (SME) businesses with an annual turnover of £45 million or below, are able to apply through the British Business Bank, which will lend eligible businesses between £1,000 and £5 million.

The Government will absorb interest costs in these loans for the first 12 months. It is important to remember that the borrower is ultimately liable for the debt.

Lenders may require a personal guarantee where more than £250,000 is borrowed, however, this cannot be a main residence and where the business defaults, the bank can only seek to recover 20 per cent of the outstanding balance after the sale of business assets.

You should seek professional advice, particularly if you are asked to provide security for a CBILS loan.

We are here to assist with loan applications so please contact us now for help and practical support.

The Government has announced a further scheme to support businesses through the Coronavirus crisis.

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) is aimed at large businesses with annual turnovers of between £45 million and £500 million.

These businesses cannot access facilities through the Coronavirus Business Interruption Loan Scheme (CBILS), which is limited to companies with a turnover below £45 million, or the Bank of England’s COVID Corporate Financing Facility (CCFF), aimed at the very largest businesses.

Like CBILS, a Government guarantee of 80 per cent will be provided to enable banks to lend in circumstances where they might not otherwise be able to.

Unlike CBILS, which only provides loans of up to £5 million, CLBILS will provide loans of up to £25 million for businesses with turnover from £45 million up to £250 million and up to £50 million to businesses for those with a turnover of over £250 million.

The initial package of business support measures announced by the Chancellor in response to the coronavirus outbreak appeared to ignore the plight of sole traders and the smallest businesses.

However, the recently introduced business bounce back loans should go some way to help. The scheme helps small businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

In addition to the various Government loan initiatives, there may be other funding options which are available to your business. Get in touch with our business advisors now to explore all available options.