Government Loan Application Deadlines Extended(!)

Updated following the Chancellor’s announcement on 24 September 2020.

To help combat the effect of COVID-19 on UK businesses, the government launched its Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loan Scheme (BBLS) earlier this year. The original deadlines for applying for these loans were fast approaching.  However, the Chancellor’s announcement today (24 September 2020) has extended the availability of these financial arrangements, into an updated “Pay As You Grow” scheme, with plans also announced for proposed successor loan scheme arrangements starting in January 2021.

CBILS

Businesses based in the UK with an annual turnover of up to £45 million could apply for a loan or other financing facility under CBILS, provided they can show that they have been adversely affected by the virus and would otherwise have had a viable business.

The loans themselves can be for up to £5 million and for a term of up to 10 years (an increase from the original 6 years), with the government guaranteeing 80% of the amount and paying all interest and fees for the first 12 months. Existing 6-year loans can be extended (with the agreement of the lender) which will cut the amount of the monthly repayments by nearly 50%, but also increase the total interest payable.

The deadline for making applications under CBILS has now been extended from 30 September 2020 to 30 November 2020.

BBLS

The Bounce Back Loan Scheme is available to smaller UK businesses which were already established before 1 March 2020 if they have been adversely affected by coronavirus. Eligible businesses can apply for 10-year loans (an increase from the original 6 years) of between £2,000 and 25% of the business’ annual turnover (capped at £50,000).  Loans taken out before 24 September 2020 can, again, be extended to a maximum of 10 years, reducing monthly capital repayments, but increasing total interest payable.      BBLS loans are fully guaranteed by the government, with interest rates fixed at 2.5% and no fees, repayments or interest payable during the first 12 months.

The deadline for making applications under the BBLS has also been extended from 4 November 2020 to 30 November 2020.

For both CBILS and BBLS loans, the revised “Pay As You Grow” scheme also allows struggling businesses to make interest-only payments or suspend payments altogether for up to six months, but with no consequential drop in credit ratings.

It’s not too late to apply under either of these government-backed schemes, but don’t delay – the banks are likely to be busy in dealing with new applications as well as requests for extensions of existing loans to the new 10-year repayment period.

If you have any questions about the Coronavirus Business Interruption Loan Scheme (CBILS), Bounce Back Loan Scheme (BBLS) or the “Pay As You Grow” Scheme please contact our Head of Corporate, Liz Barton.