Following our previous email on the Coronavirus Business Interruption Loan Scheme, there appears to have been nationwide confusion on who will actually qualify for these loans and what they will entail.
Indeed many businesses who contacted their bank in order to access this scheme were informed to explore more traditional finance arrangements first which may not have offered the low interest rates and 80% Government backed guarantee promised when the scheme was announced.
This has led to the scheme coming in for much criticism from the business community who felt that the promised funding to help support businesses through the cashflow disruption of Coronavirus was not accessible to those who needed it.
In response to this, the Government has released new guidance to lenders in order to relax some of the criteria as follows:
- Businesses no longer need to explore other commercial finance options before being able to access the Government scheme
- The scheme loans will be offered at a commercial interest rate
- Personal guarantees will no longer be required on loans under £250,000
- For loans over £250,000 personal guarantees will be limited to 20% of any outstanding amounts
- A new scheme for large businesses with turnover between £45m and £500m is to be made available to enable loans up to £25m
These changes should allow many businesses across the country to access the funding they need, with the Government also encouraging operational changes to speed up the application process.
The expanded scheme should be operational from Monday 6th April.
Should you require further clarification on the above, or any other matter, please contact your Fairhurst partner.
