What we know so far about the government-backed coronavirus business loans

Businesses are now able to apply for two loans outlined in the government’s 2020 Budget so they can continue operating during the coronavirus pandemic. More than £330 billion worth of loans is now available so businesses can pay their bills in the crisis.

Details of the support – the Coronavirus Business Interruption Loan Scheme and the Bank of England’s Covid Corporate Financing Facility – are now being confirmed while the government has also launched an information campaign to offer more clarity on what’s available.

The new Coronavirus Business Interruption Loan Scheme (CBILS) will help any viable business with a turnover of up to £45m to access government-backed finance of up to £5 million. Interest payments and any lender-levied fees for businesses will be covered by the Government for an initial period of up to twelve months.

The government will provide lenders with a guarantee of 80 per cent on each facility to give lenders further confidence in continuing to provide finance to SMEs. Available financing includes term loans, overdrafts, asset finance and invoice financing.

CBILS is available through more than 40 accredited lenders, which are listed on the British Business Bank website. Businesses should approach their own provider via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need. Decision-making on whether you are eligible for CBILS is fully delegated to the accredited CBILS lenders, which range from high-street banks and challenger banks to asset-based lenders and smaller specialist local lenders. If the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. View the British Business Bank’s eligibility checklist here.  

Meanwhile, the Bank of England’s new lending facility for larger firms – the Covid Corporate Financing Facility – is now also open for applications. By purchasing short-term corporate debt – known as commercial paper – the scheme provides a quick and cost-effective way to raise working capital for companies who are fundamentally strong but are experiencing severe disruption to cashflows, helping businesses across a range of sectors to pay wages and suppliers. The scheme is open to firms that can demonstrate that they were in sound financial health prior to the impact of Coronavirus. Companies who wish to use the scheme do not need to have issued commercial paper before. Information on the Covid Corporate Financing Facility, including which lenders to contact, is available on Bank of England’s website.

These support schemes sit alongside the Coronavirus Jobs Retention Scheme, which will provide a grant to employers to keep their workers on rather than make them redundant. Salaries will be paid at 80 per cent of their current level up to a maximum of £2,500. These grants will be available by the end of April and in the meantime £30bn of cash flow relief has been provided through the deferment of VAT bills.

“We are working round the clock to do whatever it takes to protect our people and businesses,” says chancellor Rishi Sunak. “That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”

Business secretary Alok Sharma adds: “We know that businesses are in urgent need of access to funding during these unprecedented times. The Business Interruption Scheme will make it easier for banks to lend and businesses to borrow. This will ensure that credit keeps flowing to where it is needed, when it is needed.”