Measures to
support businesses experiencing increases in costs or financial disruptions –
loans

LOANS:

A new temporary Coronavirus
Business Interruption Loan Scheme (CBILS), delivered by the British
Business Bank
, will launch in a matter of weeks to support businesses to
access bank lending and overdrafts. 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 £5m (previously announced at £1.2m in the budget). This new guarantee will
initially support up to £330 billion of lending on top of current support
offered through the British Business Bank.

The new CBILS scheme will offer
interest holidays of 6 months and is intended to be up and running in 5 weeks’
time. It will temporarily replace the Enterprise Finance Guarantee (EFG), and
operate in a similar way to EFG and be provided by the British Business Bank,
but will offer more attractive terms for both businesses and lenders, with the
aim of supporting the continued provision of finance to UK businesses during
the Covid-19 outbreak.

To be eligible for support via
CBILS, the small business must:

• Be based in the UK based, with
annual turnover not exceeding £41 million • Operate within an eligible
industrial sector

• Have a sound borrowing
proposal, but insufficient security to meet a lender’s normal requirements

• Be able to confirm that they
have not received de minimis State aid beyond €200,000 equivalent over the
current and previous two fiscal years

The Chancellor has further
announced that in addition to the above support measures for businesses,
individuals (households) facing financial difficulties due to Covid-19 will be
supported by their lending institutions with at least a 3-month mortgage
payments holiday.