COVID-19: New Government Guarantee Scheme - Coronavirus Large Business Interruption Loan Scheme

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COVID-19: New Government Guarantee Scheme - Coronavirus Large Business Interruption Loan Scheme

Published 6 abril 2020

Announced on Thursday 2 April the new scheme will be aimed at the so-called “squeezed middle” of midsized companies and is expected to be operational by the end of April.

Who can apply?

Any business with a turnover above £45 million and below £500 million including sectors previously not supported, for example carmakers, leisure companies and airports.

How much is available?

Any business eligible can apply to an accredited lender for a loan of up to £25 million. Whilst the details are still being developed, it is anticipated that the scheme will operate in a way similar to the existing CBILS scheme and the Government will underwrite 80% of the debt. It is anticipated that lenders will be able to take security if it is available although lenders are being encouraged to only take security on the 20% of the loan that is not underwritten by the Government. Whilst a business remains viable it will be liable to repay all of the debt; the guarantee scheme only comes into play if the business defaults on the borrowing.

What kind of lending does it cover ?

The guarantee can be applied to loans, overdrafts, invoice financing and asset financing.

Clarifications to CBILS (Coronavirus Business Interruption Loan Scheme)

Who can apply?

The scheme applies to SMEs which are now defined as businesses with a turnover up to £45 million. The cap on employee numbers of 249 or less is likely to be relaxed.

How much is available?

An accredited lender can make available amounts between £25,000 to £5 million for loans and asset finance for up to 6 years and for invoice finance and overdrafts for up to three years. The Government is also offering a Business Interruption Payment which cover the full amount of the interest for a year.

Can a lender take security?

On loans of less than £250,000 a lender should not request security. On loans above £250,000 lenders are being encouraged to only take security on the 20% of the debt which is not underwritten by the Government.

Do you have to go to your existing Bank or Finance provider to apply?

No – you can apply to any one of the accredited lenders can make a facility available to an eligible business.

Can you make more than one application?

Yes – the scheme is not limited to only one application. For example you could request CBILS support for an overdraft facility and then, at a later date, apply for a loan supported by CBILS.

 

Authors

Neil Warwick

Neil Warwick

Newcastle

+44 (0) 191 404 4178

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