On Tuesday, 17th March, Chancellor Rishi Sunak stated that the Government is extending the Coronavirus Business Interruption Loan Scheme.
Previously announced as part of the 2020 Budget, the Scheme has increased business loans from £1.2million to up to £5million, with no interest due for the first six months.
The Scheme will be delivered by the British Business Bank, supporting long term viable businesses to access bank lending and overdrafts.
The Government will also provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) in order to further their confidence in continuing to provide finance to small and medium enterprises.
This appears to be encouraging news for many businesses.
However, given the urgency and demand for cash flow, it remains to be seen whether the mechanics of this can be implemented in time to avoid the ‘worst-case scenario’.
Businesses have also raised concerns that, if they were to take the benefit of this loan scheme, they will then be saddled with significant debt, which is not an attractive proposition going forward.
*The information set out in this article is correct at the date of publication (20 March 2020). The effect of coronavirus on businesses is a fast-changing area and so it is important to obtain legal advice to ensure you are properly protected. Find out more about the latest Government support for businesses.
If you have any questions regarding the impact of the Coronavirus upon your business or are seeking up-to-date legal advice, contact Paula Eckton on 01202 294 566 or email PaulaEckton@steeleraymond.co.uk.
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