Coronavirus: Business Interruption Loan Scheme update

Changes to increase the maximum loan facility to £5m per business and extend the interest free period on Business Interruption Loans from 6-12 months were announced on 20 March 2020. A move to increase the loan facility ceiling to £25m for businesses with revenues between £45m-£500m was announced on 2 April 2020. This Scheme, which is offered through the British Business Bank, is summarised here.

Our response:

1. Along with many business organisations and brokers, we are really concerned about this part of the government’s Coronavirus business support programme. As the bank still has a 20% exposure, we would expect that they will require business plans and forecasts, etc, to make a loan. For stable and profitable businesses, we can see that this might be a good solution, but unfortunately, we think there may be issues over eligibility and paperwork, resulting in many disappointed businesses.

We believe that there needs to be a fundamental change in either the scheme, or the attitude of banks, before this scheme will be effective. We hope that we are wrong in this, but until we see the paperwork and clients start applying, we cannot be sure.

2. The government has said that all major high street banks should be able to offer the scheme according to its full rules, and the list of accredited lenders is available on the British Business Bank website here:

This morning (23 March 2020) the British Business Bank has issued its criteria and guidelines to banks and borrowers in respect of the Coronavirus Business Interruption Loan Scheme (CBILS). Please see the following link for further details:

3. From speaking to our trusted broker contacts, we suggest that you should talk to your existing bank, or finance provider (not the British Business Bank), as soon as possible and discuss your loan requirements and business plan with them.

We can refer you to our own contacts, however, there may be a solution with your existing bank/ finance provider, depending on your individual circumstances, which negates the need to use the government Interruption Scheme.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (2 April 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.

For further information or advice on any of the issues raised, or for help with services like bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580, email, or contact your usual client director.