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.
What's in this guide?
- Government business loans and grants
- Coronavirus Business Interruption Loan Scheme
- What types of loans does the scheme support?
- Is my business eligible?
- How do I apply?
- Which business lenders are part of the scheme?
- COVID-19 Corporate Financing Facility
- Small Business Grants Fund
- Retail, Hospitality and Leisure Grant Fund
- Coronavirus Job Retention Scheme
- What are my other business finance options?
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
- ask if
- Bank of Ireland
- Bank of Scotland
- Business Enterprise Fund
- Calverton Finance
- Chamber Acorn
- Clydesdale Bank/Yorkshire Bank
- Compass Business Finance
- County Finance Group
- Danske Bank
- DSL Business Finance
- Entreprise Answers
- Finance for Enterprise
- First Enterprise
- GC Business Finance
- Haydock Finance
- Hitachi Capital
- Lloyds Bank
- Metro Bank
- Robert Owen Community Banking
- Skipton Business Finance
- Swig Finance
- 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.
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:
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