On 3 April, Chancellor Rishi Sunak announced changes to the COVID-19 Business Interruption Loan Scheme following criticism that businesses have struggled to access loans.
The Business Interruption Loan Scheme was first announced in the 2020 Budget, and provides small and medium-sized enterprises (SMEs) with annual turnover below £45 million affected by the COVID-19 pandemic access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years.
According to the government, £90 million in business interruption loans has been approved for almost 1,000 SMEs since the launch of the scheme, and £1.9 billion in corporate finance has been provided to large companies affected by the COVID-19 pandemic.
The Chancellor announced that the current Business Interruption Loan Scheme has now been extended, ‘so more small businesses can benefit’, and not just those unable to secure regular commercial financing. Additionally, Mr Sunak announced a new scheme to ‘bolster support for larger firms not currently eligible for loans’. The new Coronavirus Large Business Interruption Loan Scheme will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.
The Chancellor also stated that lenders have been banned by the government from requesting personal guarantees on loans under £250,000 and making operational changes to speed up lending approvals. The government will continue to cover the first twelve months of interest and fees.
Mr Sunak said: ‘We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.’
The full details can be found here.