As of today (5th of November 2020), the UK has entered a second national lockdown, meaning that all non-essential businesses will be shut for a month (until the 2nd of December). These restrictions include restaurants, pubs, gyms and any other non-essential shops.
This also means that the majority of businesses in the UK are currently looking for ways to survive and additional injections of money. To support businesses, the government has put in place certain Coronavirus support schemes, including the recently extended Furlough scheme.
In addition, on the 3rd of November, the government announced an extension of Coronavirus business loans. The loan options include:
The Bounce Back Loan Scheme (BBLS)
The Bounce Back Loan launched back in March, provides companies with a loan of up to 25% of their annual turnover (capped at £50,000). The loan is 100% government backed and offers the first 12 months free of repayments, fees or interest. The deadline for applications was first set as the 30th of November 2020, however, it’s now been extended to the 31st of January, 2021.
Companies that have already borrowed under the Bounce Back Loan Scheme now have the option to “top up” their loan to the maximum amount possible. The same eligibility criteria applies and the amounts available to borrow have not changed.
Coronavirus Business Interruption Loan Scheme (CBILS)
The Coronavirus Business Interruption Loan scheme was introduced to help small to medium-sized businesses during the COVID-19 pandemic. As opposed to the Bounce Back Loans, CBILS is 80% government-backed, meaning that part of the loan comes from alternative lenders. There are over 100 lenders under this scheme, including high-street banks, asset-based lenders and challenger banks.
Under the CBILS scheme, businesses can borrow up to £5 million and the government will cover interest payments and any lender-levied charges for the first 12 months. The extended deadline to apply for this scheme is now the 31st of January 2021. Find out more on how to apply and eligibility criteria on the government website.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
The Coronavirus Large Business Interruption Loan Scheme is aimed at helping large SMEs with over £45 million annual turnover. Under the CLBILS scheme, medium to large-sized businesses are able to get finance of up to 25% of annual turnover (up to £200 million). Similarly to the CBILS scheme, the loan is 80% government-backed and relies on alternative lenders. The finance is available from 3 months to 3 years.
The application deadline for this loan has also been extended until 31st of January 2021. Find out more about eligibility and applying for a lender here.
Which loan is right for my business?
If you’re unsure which loan to apply for, here’s a comparison table showing the difference between the Bounce Back Loan and the Coronavirus Business Interruption Loan.
|Bounce Back Loan||Coronavirus Business Interruption Loan|
|Launched||4th of May, 2020||23rd of March, 2020|
|Loan amount||25% of annual turnover (maximum of £50,000)||Up to £5 million|
|Loan term||Up to 6 years||Up to 6 years|
|Interest fees||None for the first 12 months||None for the first 12 months|
|Capital repayments||None for the first 12 months||None for the first 12 months|
|Safety net||100% Government backed||80% Government Backed|
Business based in the UK
Has been negatively affected by Coronavirus
Was not an “undertaking in difficulty” on 31st December, 2019
Business based in the UK
Business would be viable were it not for the pandemic
Has been adversely impacted by Coronavirus
Wasn’t classed as a “business in difficulty” on 31st December, 2019 (if borrowing more than £30,000)
|Application process||Easy – a short and simple online form
Just seven questions
|Harder – will have to provide a plan on what the money will be used for. Also, additional documents needed, such as cash flow forecasts, business plans, details of assets, etc.|
|Process speed||Within 24 hours of successful application||May take a couple of weeks|
|Better suited for||Smaller businesses or self-employed people who need a micro-loan||Larger businesses (turnover up to £45 million) who need a larger loan|
Get in touch…
We know that it’s a tough time for thousands of businesses and we are here to help you in any way we can.
We can advise you on what financing option is the most suited for your business as well as help you apply for it on time. Our professional team of accountants can thoroughly review your numbers and help you make important business decisions to survive the second lockdown.
If you’d like to discuss your options, get in touch with us by calling on 01202 755600 or email to firstname.lastname@example.org.