coronavirus business interruption loan scheme

UK Chancellor of the Exchequer Rishi Sunak has extended the government-guaranteed Covid-19 business loan schemes until the end of March. The announcement was joined by confirmation that the furlough scheme has been extended until the end of April 2021.

The Chancellor said:

“Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.”

Businesses will be given until the end of March to access the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and the Coronavirus Large Business Interruption Loan Scheme (CLBILS). These programs had been due to close at the end of January.

The schemes have already provided over £68 billion in guaranteed loans helping to keep COVID impacted businesses afloat.

The government reported that over 34,500 small and micro businesses have accessed BBLS over the past month, with more than 1.4 million enterprises receiving finance through the scheme since it launched in May. This total includes more than 62,000 businesses that have opted to ‘top-up’ their Bounce Back Loans to the full £50,000, or a maximum of 25 per cent of their turnover if lower, available through the scheme.

Over 82,000 businesses have now secured facilities through CBILS, while the CLBILS has enabled 675 larger firms to access almost £5 billion worth of support.

There are 28 lenders accredited to the BBL scheme and 113 lenders are now accredited to the CBIL scheme. Multiple UK Fintechs are supporting the program.

Stephen Pegge, Managing Director of Commercial Finance at UK Finance, commented on the news:

“The UK’s banking and finance industry continues to support businesses of all sizes across the country to help them through these challenging times. As this year draws to a close, over 1.5 million businesses are supported by a government-guaranteed loan scheme with funds totaling over £68 billion, demonstrating the unprecedented level of assistance provided to UK enterprises. Over the past nine months, bank staff have worked hard to process applications to meet extremely high levels of demand, while ensuring that the necessary anti-fraud and money laundering checks are carried out on all applications. As the impact of the pandemic continues to be felt by businesses across the country and particularly in areas facing greater restrictions, the chancellor’s announcement today that the application deadline for the schemes is being extended to the end of March 2021 will give more time for firms to access the finance they need. In addition, SMEs can also ‘top-up’ their Bounce Back Loan to the maximum value of £50,000, or 25 per cent of their turnover if lower and businesses are encouraged to contact their lender if they wish to access these additional funds from their existing loan.”

The schemes are supported by the British Business Bank.

Source

MarketFinance, one of the world’s largest peer-to-peer (P2P) invoice finance platforms, has cautioned that many UK-based SMEs could soon run out of cash. This, as the government-backed funding schemes are scheduled to end soon.

The Coronavirus Business Interruption Loan Scheme (CBILS) will end on September 30, 2020. However, MarketFinance claims that it has found that many small businesses have decided to access funding through the Bounce Back Loan Scheme (BBLS) instead.

But MarketFinance’s research shows or indicates that SMEs have a little over £9,000 (on average) remaining in their bounce back loans. Most small companies expect these funds to run out by the end of this month, MarketFinance claims.

The firm’s research reveals that 77% of SMEs realize that the CBILS can offer a bigger loan facility. About 68% of small companies are aware that they’re refinancing their bounce back loan via the CBILS facility. But 63% of small businesses did not actually realize that applications for CBILS loans are expiring by the end of this month.

Anil Stocker, CEO at MarketFinance, noted that the BBLS may have been a decent short-term solution for small businesses. He believes that it offered the support needed during the lockdowns, however, the CBILS funds should “provide the impetus to do more.” He also mentioned that not having the funds to maintain a business’ cashflow might be “disastrous” for many small businesses.

He added that it’s important for companies to begin looking past the basic survival mode and start looking seriously at how they can change their business model to work productively during the COVID-19 crisis. He believes that there could be new ways for businesses to generate significant revenue, even during these challenging times.

He further noted:

“Securing government-backed funding now, before the deadline, is an opportunity for businesses to access the working capital they need to build for the longer term. The idea of these being ‘unprecedented times’ has been thrown around a lot this year. Initiatives like the CBILS offer similarly unprecedented access to fee and interest-free funding – but only for a limited time.”

MarketFinance has reportedly surveyed 2,000 UK-based company owners and found that 76% are interested in being able to access a CBILS facility if they really need it by the end of 2020.

About 77% of SMEs in the UK claim that they’ll only be able to generate 50% of the revenue this year that they earned in 2019. About two-thirds of business owners stated that a no-deal Brexit could pose major risks to their operations.

Over 1.2 million SMEs have reportedly used the BBLS facility. Meanwhile, around 60,000 UK businesses were approved or qualified for a CBILS loan.

Source

UK Chancellor Extends COVID Loan Schemes, Over 1.5 million UK Businesses Supported So Far

P2P Lender MarketFinance Reveals that Many Small Businesses in the UK Could Run Out of Cash Soon