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Extension of access to finance schemes and longer repayment periods

Posted on 1 Oct 2020 - News

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The government is extending four temporary loan schemes available to businesses adversely affected by the pandemic to 30th November 2020 for new applications.

Bounce Back Loan Scheme (BBLS)

Bounce Back Loans are between £2,000 and £50,000, capped at 25% of turnover, with a 100% government guarantee to the lender to provide them with the confidence they need to support the smallest businesses.

The borrower does not have to make any repayments for the first twelve months, with the government covering the first twelve months’ interest payments.

Under the new Pay as you Grow initiative, the government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce their average monthly repayments on the loan by almost half.

Businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments). These changes will provide greater flexibility to repay these loans over a longer period and in a way that better suits businesses’ individual circumstances.

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CIBLS) provides loans of up to £5 million with an 80% government guarantee to the lender, giving lenders the confidence to provide finance to SMEs. The government does not charge businesses for this guarantee and also covers the first twelve months of interest payments and fees.

The government intends to allow CBILS lenders to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides loans of up to £200 million (to a maximum of 25% of turnover), with an 80% government guarantee to the lender, which is more generous than equivalent schemes in many other countries.

Future Fund

The Future Fund is an investment scheme for innovative and fast-growing UK-based businesses, which has provided loans ranging from £125,000 to £5 million, subject to at least equal matching from private investors. Over 700 convertible loans worth £720 million have been approved.

Businesses that have already accessed a Future Fund convertible loan cannot apply for another one.

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