Coronavirus loan scheme launched by Sheffield based-bank offering up to £5million for struggling firms

Struggling smaller firms hit by coronavirus can apply for a loan of up to £5m under a new scheme from the British Business Bank based in Sheffield.

Tuesday, 24th March 2020, 6:00 am
Updated Wednesday, 25th March 2020, 12:43 pm

The Coronavirus Business Interruption Loan Scheme is for companies with a plan to borrow cash to trade out of any short-to-medium term difficulties caused by the pandemic.

And it provides lenders with a government-backed guarantee covering 80 per cent of outstanding balances.

Repayment terms are up to six years, with interest and fees paid by Government for the first 12 months.

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Keith Morgan, chief executive of the British Business Bank.

The scheme is delivered by the Sheffield-based British Business Bank and supported by more than 40 lenders listed on the bank’s website.

Keith Morgan, chief executive, British Business Bank, said: “In this period of exceptional hardship for smaller businesses across the UK, it has been vitally important to get this new scheme up and running as soon as possible.

“Available from today, we hope this new scheme will enable lenders to provide the finance smaller UK businesses need, alongside other government measures, to help them survive the current economic disruption.”

The Coronavirus Business Interruption Loan Scheme supports a wide range of finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

It may be used for unsecured lending for facilities of £250,000 and under. If the lender can offer finance on normal commercial terms they will do so, the bank says.

Stephen Jones, CEO, UK Finance said: “The banking and finance sector is committed and has the capacity to support viable businesses with their cashflow and investment needs. The CBIL Scheme is an important additional solution to the support banks and finance providers are offering SMEs to help them through the cashflow pressures they may increasingly experience during this unprecedented period.

“Lenders who are accredited to offer finance under the scheme are moving as quickly as possible to provide this support which will be available through customers’ usual contacts. Many lenders have online channels which customers can use to access the scheme. Businesses don’t need to worry about the support running out as this will be available on an on-going basis for those eligible businesses that need it.”

Although the Budget announced that an initial £1.2bn of government-backed lending would be available through the new scheme, the government has since said it will be demand-led and will be resourced accordingly.

Business secretary, Alok Sharma said: “We know that businesses are in urgent need of access to funding during these unprecedented times. The Coronavirus Business Interruption Loan Scheme will make it easier for banks to lend and businesses to borrow. This will ensure that credit keeps flowing to where it is needed, when it is needed.”

Chancellor of the Exchequer, Rishi Sunak said: “We are working round the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”