The government announced as part of the Spring Budget 2020, that a new Coronavirus Business Interruption Loan Scheme will be launched. Since the Budget changes have been made to the scheme increasing the benefits provided.
The scheme will be delivered by the British Business Bank to support the continued provision of finance to UK businesses during the Covid-19 outbreak. The British Business Bank is 100% owned by the government but independently managed.
The new scheme will temporarily replace the Enterprise Finance Guarantee (EFG) scheme with significant additional support being made available. This support is in addition to existing measures. The scheme will operate in a similar way to EFG but on more attractive terms for both businesses and lenders.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the scheme will support loans of up to £5 million in value with no interest due for the first six months.
The British Business Bank does not lend or invest directly but rather works with 130 partners such as banks, leasing companies, venture capital funds and web-based platforms. The new scheme is expected to be available from Monday 23 March 2020.