Loans for small businesses affected by coronavirus

The government is temporarily replacing the Enterprise Finance Guarantee (EFG) scheme, provided through the British Business Bank, with a Coronavirus Business Interruption Loan Scheme.

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With cancelled events, few customers and supply chain disruptions, small businesses are expected to take a hit during the coronavirus outbreak. But you have better access to credit than you thought from both the government and some private lenders.

As of 1 April, UK businesses will begin receiving £22bn in support in the form of business rates relief and grants up to £25,000. The government has also urged the major UK banks to make sure the benefits of the loan scheme reach businesses and consumers, and that no businesses are unfairly refused funds.

Government business loans and grants

The UK government will provide at least £330bn in state-backed loans to people and business affected by coronavirus. Cash grants up to £25,000 will be provided for businesses in the retail, leisure and hospitality industry, and small businesses in other industries will be eligible to apply for grants of £10,000.

This will be alongside another £20bn in other measures such as tax breaks to help support companies and families. Business rates will also be scrapped for all retail, leisure and hospitality companies this year.

Coronavirus Business Interruption Loan Scheme

As part of the 2020 Budget, the UK Government announced a “Coronavirus Business Interruption Loan Scheme” to encourage lenders to provide business finance to viable small businesses. This will temporarily replace the existing Enterprise Finance Guarantee (EFG), and can be used to cover loans from £1,000 to £1.2 million.

Under the scheme, the lender receives a government-backed 75% guarantee against the loan, but the borrower remains 100% liable for the debt. Since 2009, the scheme has supported over 32,000 business loans or finance facilities, with a total value of more than £3.3 billion.

What types of loans does the scheme support?

  • Term facilities (3 months to 10 years)
  • Revolving Credit (3 months to 3 years)
  • Invoice finance facilities (3 months to 3 years)
  • Asset finance facilities (3 months to 3 years)

Is my business eligible?

Your business will need to meet the following criteria to be eligible for support via the Coronavirus Business Interruption Loan Scheme (or EFG):

  • Be based in the UK
  • Have yearly turnover of no more than £41 million
  • Operate in an eligible sector
  • Has a legitimate borrowing plan but doesn’t meet normal lender requirements
  • Has not received de minimis state aid of more than €200,000 in previous three fiscal years

How do I apply?

To apply for a loan under the EFG scheme, you will need to contact one of the accredited lenders listed below.

Which business lenders are part of the scheme?

There are currently 39 accredited business lenders under the EFG scheme. These are:

  • ABN-AMRO Commercial Finance
  • Aldermore
  • Art
  • ask if
  • Bank of Ireland
  • Bank of Scotland
  • Barclays
  • BCRS
  • Business Enterprise Fund
  • Calverton Finance
  • Chamber Acorn
  • Clydesdale Bank/Yorkshire Bank
  • Compass Business Finance
  • County Finance Group
  • CWRT
  • Danske Bank
  • DSL Business Finance
  • Entreprise Answers
  • Finance for Enterprise
  • First Enterprise
  • GC Business Finance
  • Genesis
  • Haydock Finance
  • Hitachi Capital
  • HSBC
  • Let’sDoBusiness
  • Lloyds Bank
  • MSIF
  • Metro Bank
  • NatWest
  • Newable
  • Robert Owen Community Banking
  • Santander
  • Skipton Business Finance
  • Swig Finance
  • RBS
  • TSB
  • UKSE
  • Ulster Bank

COVID-19 Corporate Financing Facility

Large businesses affected by the coronavirus pandemic can also apply for the Bank of England to buy their short-term debt so that they can finance their short-term liabilities.

The scheme is designed to operate for at least 12 months, and is delivered by commercial business lenders and backed by the Bank of England. In order to be eligible, businesses will need to make a material contribution to the UK economy.

Small Business Grants Fund

The UK government is offering grants for small businesses with a property that is eligible for Small Business Rates Relief (SBRR), including tapered relief and rural rates relief. Eligible businesses can claim a grant up to £10,000, but cannot claim for a property that is occupied for personal use, car parks, or if their business was in liquidation or dissolved by 11 March.

Retail, Hospitality and Leisure Grant Fund

Retail, leisure and hospitality businesses can also claim rates grants of £10,000 and £25,000 provided they have an eligible property or properties covered under the expanded retail discount.

Businesses that were eligible as of 11 March must have a property with a rateable value of less than £51,000. Properties with a rateable value up £15,000 can receive a £10,000 grant, and properties with a value between £15,000 and £51,000 are eligible for a £25,000 grant.

Coronavirus Job Retention Scheme

As part of its measures to protect businesses in the wake of the coronavirus pandemic, the UK government has also announced a job retention scheme to help businesses cover the wages of furloughed employees.

The scheme is intended to last for three months, starting from 1 March, and will cover 80% of staff wages, up to a maximum of £2,500 per month. For the time being, you will need to cover employee wages, but will then be able to claim what you’ve paid back directly from the government.

The claim portal is currently unavailable, but is scheduled to be ready by the end of April.

Eligibility requirements

To be eligible for the Coronavirus job retention scheme, your business must have:

  • A PAYE payroll scheme that was started before 28 February 2020
  • Enrolled for PAYE online
  • A UK bank account

What are my other business finance options?

If your business is ineligible for finance through the government scheme, but still needs a loan, there are alternatives. The government-backed Start Up Loans offers business finance up to £25,000 for partners of new or emerging businesses.

You could also consider the following business lenders:

Name Product Loan type Loan amounts Loan terms Turnover/trading criteria
Esme Business Loan
Fixed rate unsecured loan
£10,000 to £250,000
1 year to 5 years
£15,000 minimum turnover,
minimum 18 months trading
Representative example: Borrow £50,000 over 24 months at a rate of 8.40% p.a. (fixed). Representative APR 8.73% and total payable £54,491.93 in monthly repayments of £2,270.5.
Fleximize Unsecured Business Loan
Fixed rate unsecured loan
£5,000 to £250,000
1 month to 2 years
£60,000 minimum turnover,
minimum 6 months trading
Representative example for loans of £25,000 or below: Borrow £12,500 over 15 months with an interest rate of 36.4% p.a. (fixed). Representative APR 43.1% and total payable £15,740.33 in monthly repayments of £1,049.36.
Funding Circle Unsecured Business Loan
Fixed rate unsecured peer-to-peer loan
£10,000 to £250,000
6 months to 5 years
No specified minimum turnover,
minimum 2 years trading
MarketFinance Small Business Loan
Fixed rate unsecured peer-to-peer loan
£5,000 to £250,000
6 months to 3 years
£50,000 minimum turnover,
minimum 2 years trading
iwoca Small Business Loan
Variable rate unsecured loan
£25,000 to £250,000
3 - 5 years
£150,000 minimum turnover,
minimum 2 years trading
Representative example: Borrow £50,000 over 60 months at a rate of 14.4% p.a. (variable). Representative APR 18.6% and total payable £74,881.80.
Nucleus Cash Flow Finance
Fixed rate unsecured loan
£25,000 to £150,000
3 months to 5 years
No specified minimum turnover,
minimum 3 years trading
iwoca Flexi-Loan
Variable rate unsecured loan
£1,000 to £200,000
1 month to 12 months
No specified minimum turnover or time trading
Representative example: Borrow £10,000 over 12 months at a rate of 40% p.a. (variable). Representative APR 49% and total payable £12,294.
Spotcap Short Term Loan
Fixed rate unsecured loan
£50,000 to £350,000
1 month to 24 months
£500,000 minimum turnover,
minimum 3 years trading
Representative example: Borrow £100,000 over 12 months with an average monthly interest rate of 1.4% and a 2.0% arrangement fee. Representative APR 22.8% and total payable £109,332 in monthly repayments of £9,111.
Ferratum Business Loan
Fixed rate unsecured loan
£2,000 to £50,000
18 months
£75,000 minimum turnover,
minimum 12 months trading
Growth Street GrowthLine
Fixed rate secured peer-to-peer line of credit
£25,000 to £1,000,000
From 1 day and open-ended
£250,000 minimum turnover,
minimum 15 months trading
Capital on Tap Business Loan
Variable rate unsecured line of credit
£1,000 to £50,000
1 month to 12 months
£24,000 minimum turnover,
no specified minimum time trading
Representative example: When you spend £1,200 at a purchase rate of 39.9% (variable) p.a., your representative rate is 39.9% APR (variable).
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