Announced by the Chancellor at budget and subsequently extended, this scheme provides lending to help businesses survive the current crisis. He said that “any business who needs access to cash will be able to access a government backed loan, on attractive terms”.
2/ Any business who needs access to cash will be able to access a government-backed loan, on attractive terms.— Rishi Sunak (@RishiSunak) March 17, 2020
If demand is greater than the initial £330bn I’m making available today, I will go further and provide as much capacity as required.
- £330bn made available with more promised if required.
- £5m maximum amount (increased from £1.2m initially announced).
- Interest payments for the first 12 months covered by the government (you will still need to make capital repayments).
- Up and running week beginning 23rd March.
To help with short-term cash-flow.
- Term facilities
Such as loans, deferred payment plans and revolving credit.
- Invoice finance facilities
Receive cash against future payments from customers.
- Asset finance facilities
For equipment, machinery and vehicles such as hire purchase, leasing and refinancing.
How it works
You apply with a lender as normal, over 40 providers are CBILS accredited including many high street banks. The loans are guaranteed by the government under an extension of the existing Enterprise Finance Guarantee (EFG) provided by the state-owned British Business Bank.
The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. NB – the borrower always remains 100% liable for the debt.British Business Bank
In practical terms, this means that lenders are more likely to lend to you knowing that the state is subsidising interest payments. The terms of the credit will remain between you and the lender and you will be subject to the usual underwriting process.
Your business must:
- UK based with a turnover of no more than £41 million per annum.
- Not be in a small number of industrial sectors are not eligible (includes farming, education, banking/insurance and healthcare).
- Be able to confirm that you haven’t already received substantial state aid in recent years (beyond €200,000).
- Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements.
This list is not exhaustive and more criteria may be added in future.
What you can do prior to application
We have previously sent you a tough times checklist with 18 general tips for planning ahead for your business. Based on our experience of what lenders require we recommend that you…
- Review all your regular business payments (from bank statements, Xero or other bookkeeping) with a view to working out what you can reduce, renegotiate or is absolutely essential.
- Have a clear idea of your overheads such as utilities and rates.
- Collect the full details of any existing credit including balances, providers and reference details.
- Do the same for your personal finances.
With access to our funding platform we may even be able to directly provide you with credit offers from lenders. We aim to provide you with a seamless funding service in these times when you may struggle to be able to visit a bank.