Finance providers are experiencing an unprecedented level of telephone queries from customers. Your finance provider will have plenty of information available on-line, so do go there first for any information you need.
The situation is changing by the day and we know many small businesses are having to adapt at high speed. Access to finance and maintaining cashflow are only some of the issues you may have to work through, but it is important to consider any funding requirements early on.
Access to finance is only one of the issues you may have to work through, but it is important to consider any funding requirements early on.
Coronavirus Business Interruption Loan Scheme (CBILS)
The Coronavirus Business Interruption Loan Scheme was announced by the chancellor on 11 March and has since been developed and extended to businesses with a turnover of up to £45 million.
The scheme has been designed to help businesses manage their finances given the unprecedented situation many are currently facing. It aims to support those SME businesses that were trading successfully before Covid-19 but which may now experience lost or deferred revenues, or disruptions to their cashflow as a result of the current disruption and those businesses whose growth requirements cannot supported under normal bank lending criteria.
CBILS can be used to support the provision of a number of different types of finance facility, including loans, overdraft, invoice finance and asset finance.
More details about CBILS can be found here.
Bounce Back Loan Scheme
The Bounce Back Loan (BBL) scheme announced by the chancellor helps smaller businesses and sole traders rapidly access the finance they need by filling in a simple form online with an accredited lender. Under the BBL scheme, businesses can apply for loans of between £2,000 to £50,00 from an accredit lender, up to a maximum of 25 per cent of a firm’s annual turnover.
There are no repayments required on the loan for the first 12 months, with the government making a Business Interruption Payment to the lender to cover the first 12 months of interest payments and any lender-levied charges. After this twelve-month period, interest will be payable at the government-determined rate of 2.5 per cent. BBLs have a six-year term, with no early repayment charge. The government provides a 100 per cent guarantee to the lender.
More information about the BBL scheme and how to apply is available here.
These schemes are part of a number of measures announced by government, with new initiatives launched regularly. Please visit the gov.uk web site for the most up to date information here.
Banks and finance providers have the capacity and appetite to support viable businesses and a number of individual firms have announced various support packages, but it is still important that you contact them to discuss your specific needs at the earliest opportunity. There is also a wide range of advice, guidance and finance options available to you.
The finance industry is here to help. The Let’s Talk Business campaign is advising businesses to:
- Think about how your customers, suppliers and staff could be affected by Covid-19, so you are prepared for any potential impact.
- Ask your bank or finance provider early on if you think you might need additional finance, or changes in your current arrangements. The earlier you engage the easier this will be.
- Look into alternative finance options. Most applications are successful, but if your first choice doesn’t work out, there are many different providers and types of finance available.
- Know where to go for more information to help your business. Use relevant guidance to consider what plans you should be making and actions you should be taking.
This guide is a starting point for businesses looking for assistance. UK government advice can be found; here.