Businesses are now able to access government support to keep operating in the face of the global economic emergency brought on by coronavirus. Details of two new loan schemes are being confirmed and an information campaign launched so that businesses know how to get help.
More than £330 billion of loans and guarantees to help firms continue operating are available for applications from the two schemes launched on Monday.
“We are working round the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now,” said the Chancellor of the Exchequer, Rishi Sunak.
For small and medium sized businesses, the new Coronavirus Business Interruption Loan Scheme is now available for applications.
This scheme is aimed to help any viable business with a turnover of up to £45m to access government-backed finance of up to £5 million. Interest payments and any lender-levied fees for businesses will be covered by the government for an initial period of up to twelve months.
“We know that businesses are in urgent need of access to funding during these unprecedented times. The Business Interruption Scheme will make it easier for banks to lend and businesses to borrow. This will ensure that credit keeps flowing to where it is needed, when it is needed,” said Business Secretary, Alok Sharma.
The government will also provide lenders with a guarantee of 80 per cent on each facility to give lenders further confidence in continuing to provide finance to SMEs. The scheme is available through more than 40 accredited lenders, which are listed on the British Business Bank website.
The Bank of England’s new lending facility for larger firms – the Covid Corporate Financing Facility – is also open for applications to participate from Monday morning.
By purchasing short-term corporate debt – known as commercial paper – the scheme provides a quick and cost-effective way to raise working capital for companies who are fundamentally strong but are experiencing severe disruption to cashflows, helping businesses across a range of sectors to pay wages and suppliers.
The scheme is open to firms that can demonstrate that they were in sound financial health prior to the impact of coronavirus. Companies who wish to use the scheme do not need to have issued commercial paper before.
A government information campaign has also been launched to ensure businesses are aware of the support available to them and how to access it. In addition to a new central website, the campaign will use media channels including radio, social media and television to reach businesses eligible for help.