Due to businesses already feeling the impact of Covid-19 the Government has announced a temporary Coronavirus Business Interruption Loan Scheme.
Keith Morgan, Chief Executive, British Business Bank, said: “At Budget 2020, the Chancellor has announced new measures relating to the British Business Bank. Together they represent a significant package of funding that further underlines the critical role of the Bank in making finance markets work better for smaller businesses across the UK, allowing them to prosper and grow”.
Coronavirus Business Interruption Loan Scheme
This scheme will temporarily replace the existing EFG (Enterprise Finance Guarantee) scheme, making an additional £1bn available.
This scheme will be delivered by the British Business Bank, who says that it should be in place within a matter of week, enabling the support to SMEs by giving them access to bank lending and overdrafts.
The government will support lenders by guaranteeing up 80% of each loan, subject to a limit on bad loans it makes claims on.
By providing this additional funding, the government is hoping to give lender more confidence in approving credit for the UKs Small Businesses that may not have the enough turnover or equity to meet the lender’s standard criteria.
Please note that even under this scheme, the small business will be liable for 100% of the debt.