More small businesses set to benefit from government loan scheme

Changes to state aid rules mean more small businesses can now benefit from loans of up to £5million under the Coronavirus Business Interruption Loan Scheme (CBILS).

More than 57,000 businesses have benefitted from £12.6billion of support through CBILS to date, according to official figures.

The Treasury says the new changes are a result of UK government and industry lobbying.

Previously businesses which were classed as ‘undertakings in difficulty’ were unable to access CBILS because of EU rules.

However now, businesses in this category and which have fewer than 50 employees and a turnover of less than £9m can apply to CBILS.

The Economic Secretary to the Treasury and the Small Business Minister have written to accredited lenders setting out their expectation that these changes will be implemented to ensure more businesses are receiving support.

Undertakings in difficulty are usually businesses with high levels of debt and accumulated losses.

Small Business Minister Paul Scully said the announcement would mean “even more small firms will be able to access much-needed financial support”.

To be eligible your business must:

• Be UK-based in its business activity
• Have an annual turnover of no more than £45m
• Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
• Self-certify that it has been adversely impacted by the coronavirus

Businesses can access up to £5m of loans and other finance, including overdrafts and invoice finance.

The government guarantees 80 per cent of the finance to the lender and it pays interest and any fees for the first 12 months. The business remains liable for repayments of the capital.

There are terms of up to three years – for overdrafts and invoice finance – and of up to six years for loans and asset finance.

The full rules of the scheme and a list of accredited lenders is available on the British Business Bank website