Due to the COVID-19 outbreak, the government is taking crucial steps to save the economy and help the businesses stay consistent. Among those measures, Coronavirus Business Interruption Loan is playing a vital role for Small and Medium Enterprises (SMEs) allowing them to lend up to £5m at preferential rates.

 

WHAT IS THE LOAN FOR?

 

The Coronavirus Business Interruption loan Scheme (CBILS) is an access to £50,00000 by the government for the overdrafts, invoice finance and asset finance to help floating the  SMEs with cash flows and decreasing sales. This loan will be provided by the British Business Bank through its accredited lenders. The loan cycle consists of six years and the business has access to it without any initial payments. The government will cover the first 12 months interest payments and any lender fees.

 

Who are The Lenders?

 

The accredited lenders of the British Business Banks are:

 

• Asset-based lenders
• Smaller specialist local lenders
• High-street banks
• Challenger banks

 

The businesses can borrow money from these lenders. Know how to get access to the loan from London Accountants.

 

What is the Eligibility of the Lenders?

 

Lenders must be accredited by the British Business Bank and from a list of Fourty.  They includes- high street banks, challenger banks, asset based banks, smaller specialist local lenders. There are some things to consider to be  eligible lender

 

• Completing an Expression of Interest form

• Show on interest to provide £50,00000 on new lending following the accreditation

• Lend on security basis( primary residential property is not allowed)
• A clear intention or strategy to lend SMEs by an explanation
• Must be a regulated and licensed holder with required permissions and authorisations

 

What is the Eligibility of the Business to Have an Access to This Scheme?

 

• The business must be located in the UK 
• Business turnover should be below £45 million, annually
• Businesses should approach lender from the list on the website (British Business Bank)
• Have a borrowing proposal which the lender: 

1. would consider viable, if it not for the Covid-19 pandemic
2. Believes will enable you to trade out of any short term to medium term difficulty

 

Any business from the UK is allowed to apply for this loan scheme. Self-employed, sole traders,freelancers and limited partnerships are also entitled for the loan as far as they don’t break the turnover limit and earn 50% revenue from this and have individual business bank accounts. 

 

Who is Not Eligible for This Loan?

 

 Some organizations are forbidden by the law for the CBILS. They are enlisted as the,

• Banks and building securities
• Insurers and reinsurers
• Public primary and secondary schools
• Employer, professional, religious or political organizations
• Trade unions

 

How Does the Scheme Work in a Nutshell?

 

There are 40 lenders available to provide the finance across the UK. British business bank is on the charge and the four accredited lenders declared will not demand any security against the loan below £25,00000. Government will give the lenders 80% guarantee but the borrowers are liable for the 100% loan. Overdrafts and invoice finance facilities have a three years limit and loans and asset finance facilities are for a total six years.

 

There is no payment to access the loan , on the other hand, the lenders have to pay a fee to get involved in this scheme. Lenders also can use normal commercial terms to do the scheme.

 

Regarding all aspects of this pandemic, it's high time to seek financial guidance from the experts. If you would like to discuss your situation or if you are looking for guidance, please contact Accountants in London. 

.

DISCLAIMER: The purpose of the blog is to provide information and insight regarding the situation. The readers must contact experts before making any decisions based on the information. We highly appreciate you to contact Taj Accountants for further assistance.