Yesterday the chancellor announced a Coronavirus aid scheme for small and medium-sized businesses in an acknowledgement that banks have been slow and reluctant to lend to small and medium-sized businesses under the Coronavirus Business Interruption Loan Scheme (CBILS).
Crucially the loans will be 100% Government-backed and interest-free for 12 months. Reducing the bank’s exposure to risk to nil.
Rishi Sunak told MPs that the ‘bounce back loan’ was a consequence of many firms struggling to access credit during the COVID-19 lockdown.
The Coronavirus aid scheme for small and medium-sized business
- Businesses can apply for a maximum of £50,000 or 25% of turnover
- There will be no viability checks, only fraud checks
- The scheme will be accessible via a simple online form
What could it mean?
Under the business interruption loan scheme lenders have focussed on the trading history of small and medium-sized businesses and affordability which has disadvantaged many start-up businesses and even businesses that rely on seasonal demand.
This bounce-back loan is aimed at defeating those obstacles to borrowing and could / should mean that micro, small and medium-sized organisations get the support they need to weather the self-imposed economic crisis caused by Government restrictions.
The scheme is scheduled to open for applications on Monday 4th May.
We’ll keep in touch with you on our progress and if you’d like us to manage the process for you then please feel free to get in touch with the team today.