There are 2 Coronavirus Loan Schemes available:

CBILS for larger loans and the Bounce Back loan for smaller business and loans up to £50,000.

Bounce back loans for small businesses 

The application window has been extended until the end of November and there is the option to extend the repayment period to ten years, make interest only payments or take a payment holiday (subject to proof of necessity)  

  • Simple online self-certified application- this has gone live today with most of the major high street banks.
  • Approach your own bank first, but you can also try other lenders if can’t access with own bank.
  • Can borrow lower of £50,000 or 25% of turnover.
  • No personal guarantees required- 100% underwritten by government- but lenders will chase the borrower for unpaid loans and may look to seize assets in worst case.
  • You have to self-declare your turnover, that the amount you wish to borrow is not more than 25% of turnover and whether your business has been negatively affected by the virus. 
  • The exclusion for businesses that were in difficulty at 31 December 2019 has been removed, such businesses must now state that the aid is not used to support export activities.
  • There will be no interest to pay for the first 12 months, that interest and any fees are paid by government.
  • The loan has a fixed 6 year term, interest is capped at 2.5%, but there are no early repayment fees.  (1 year interest free then 5 years with interest to pay unless loan repaid early).
  • A business bank account may be required to apply for the loan with some banks , but for instance HSBC will allow personal account holders with a 2019 tax return to apply, HSBC also allows non-HSBC customers to apply, they can open an HSBC business account or a temporary loan feeder account.
  • Your bank may consider repaying other business borrowings to be a qualifying purpose for the bounce back loan, check with your bank.
  • If you have a CBILs loan that could have been under the bounce-back loan you may be able to switch (bounce back terms are preferable).

If your business  has been affected by the virus you seriously consider taking the loan. There is no interest or repayments necessary for 12 months, and there are no early repayment fees.  Remember, although underwritten by government the loan must be repaid eventually so you should plan to make repayments.  We are not authorised to give financial services advice, you should seek advice from an independent financial advisor before taking any loan.

The table below shows illustrative costs for a Bounce Back Loan.

Loan amount

£5000

£10,000

£15,000

£20,000

£30,000

£40,000

£50,000

First monthly payment (at month 13)

£93.95

£187.90

£281.85

£375.80

£563.70

£751.60

£939.49

Total amount repayable over the term of the loan

£5,443.18

£10,866.32

£16,329.50

£21,772.71

£32,658.98

£43,545.27

£54,431.60

Your monthly repayments will reduce over time as you repay the capital balance.A Business Interruption Payment (BIP) is the amount the government pays in the first year to cover your interest. 

Loan Amount

£5000

£10,000

£15,000

£20,000

£30,000

£40,000

£50,000

Business Interruption Payment (BIP

£125.01

£249.99

£375.00

£500.05

£749.99

£999.98

£1,249.97

For limited companies if the loan is used to support director drawings an overdrawn loan account may arise, particularly if reduced profits mean dividends cannot be voted.  Director loans over £10,000 may give rise to a benefit in kind charge.  Any director loan owed to a limited company must be repaid within 9 months of the end of the accounting period or a tax charge arises.

 

Small and Medium Business Coronavirus Business Interruption Loan Scheme (CBILS)

Marsland Nash can help you with making an application under this scheme.

This scheme helps small and medium-sized businesses affected by Coronavirus (COVID-19) to access finance of up to £5 million.

The Coronavirus Business Interruption Loan Scheme (CBILS) supports small and medium-sized businesses, with an annual turnover of up to £45 million, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years.

The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.

The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to small and medium-sized businesses.

The scheme is delivered through commercial lenders, backed by the government-owned British Business Bank.

There are 40 accredited lenders able to offer the scheme, including all the major banks.

You’re eligible if:

  • your business is based in the UK
  • your business has an annual turnover of up to £45 million
  • your business has a borrowing proposal which the lender would consider viable, if not for the coronavirus pandemic
  • you can self-certify that your business has been adversely impacted by coronavirus

Businesses with a turnover over £45 million may be entitled to other government support.

How to apply

The full rules of the scheme and guidance on how to apply is available on the British Business Bank website.

https://www.british-business-b...