The discontinuation of LIBOR at the end of this year represents a fundamental change within the banking and finance industry and will affect a significant proportion…
As announced in today’s Budget we have a ‘new loan scheme to support access to finance for UK business as they grow and recover from the disruption of the COVID-19 pandemic’; named The Recovery Loan Scheme.
The government guarantees 80% of the finance to the lender to ensure they continue to have the confidence to lend to businesses. Details as we have them are at link summary of points below.
What we know – finance available?
- Term loans and overdrafts will be available between £25,001 and £10 million per business
- Invoice finance and asset finance will be available between £1,000 and £10 million per business
Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
What we know – eligibility and use of funds?
You will be able to apply for a loan if your business:
- is trading in the UK
You will need to show that your business:
- is viable or would be viable were it not for the pandemic
- has been impacted by the coronavirus pandemic
- is not in collective insolvency proceedings – further details will be provided in due course
Business that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under this scheme, if they meet all other eligibility criteria.
Once received, the finance can be used for any legitimate business purpose, including growth and investment.
How to access?
The scheme launches on 6 April and is open until 31 December, subject to review. Loans will be available through a network of accredited lenders, whose names will be made public in due course.
We will update this blog as we get more details.