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How can my small business apply for a Coronavirus Business Interruption Loan

Get the lowdown on the government-backed Coronavirus Business Interruption loan scheme, including how to apply, and who is eligible

A key part of the measures announced to help UK businesses was the Coronavirus Business Interruption Loan scheme, which offers government-backed loans of up to £5m to eligible businesses.

The scheme went live today (23 March), shifting the government’s coronavirus measures from mere words into concrete action.

This guide will tell you everything you need to know about the scheme, including how the loans will work, who is eligible, and how to apply.

It is divided into the following sections:

How does the Coronavirus Business Interruption Loan Scheme work?

The key thing you need to know about the Coronavirus Business Interruption Loan Scheme is that it’s designed to make existing business lending easier.

While the government has put up more than £330bn of loans and guarantees, you won’t directly get this cash, it will be given to lenders to encourage them to loan to businesses struggling with the impact of coronavirus.

For businesses, the crucial point is that the first 12 months of the loan will be interest-free (with the costs covered by the government).

Depending on the lender, a variety of business finance options will be available, including:

  • Term loans (standards business loans)
  • Overdrafts
  • Asset finance 
  • Invoice finance

Like any other loan, any business that receives a Coronavirus Business Interruption Loan is 100% responsible for repaying the finance provided.


Who is eligible for a Coronavirus Business Interruption Loan?

In short, any UK business with an annual turnover of up to £45m is eligible for a loan through the scheme (larger businesses should use the Covid Corporate Financing Facility).

In practice though, lending decisions will still be down to the lender – they’ll just have the added security of the government covering up to 80% of the loan value.


How to apply for a Coronavirus Business Interruption Loan?

The scheme is being administered by the British Business Bank, and will be delivered by over 40 different lenders.

All the usual suspects are there (including Barclays, HSBC, Natwest, Santander, and RBS), as well as smaller companies that specialise in business finance.

What all this means is that you apply for a Coronavirus Business Business Interruption Loan just like how you’d apply for any other business loan – either online or over the phone.

If you can, try to apply online: given the scale of the crisis, phone lines are expected to be inundated with applications for the scheme.

The government also advises businesses to apply to their existing lender in the first instance, and only approach other providers if they’re rejected or need a different type of finance.

There’s one final point that should be noted – lenders do not have to provide finance through the Coronavirus Business Interruption Loan scheme, if they can offer finance on their conventional terms, they will do so.


Summary

  • The Coronavirus Business Interruption Loan Scheme offers businesses government-backed loans up to £5m
  • The government is providing over £330bn in loans and guarantees to make existing business lending easier
  • The first 12 months of the loan are interest-free
  • A variety of business finance options are available, including term loans, overdrafts, asset finance, and invoice finance
  • Any business receiving a coronavirus loan is 100% responsible for repaying the finance provided
  • Businesses with an annual turnover of up to £45m are eligible for the scheme
  • The scheme is being delivered through over 40 UK lenders
  • You apply for a Coronavirus Business Interruption Loan just like how you’d apply for any other business loan – either online or over the phone
  • The government advises businesses to initially apply to their existing lender, and only approach other providers if they’re rejected to need a different type of finance

Alec Hawley
Alec Hawley

Alec is Startups’ resident expert on mobiles, investment, and politics. Before joining, he worked in the media for over a decade, conducting media analysis at Kantar Media and YouGov, writing for computer games sites like Gaming Respawn and Gamespew, and taking on a wide variety of freelance roles.