The loans are designed to help firms keep trading in the face of the global Covid-19 pandemic.
They form part of the £330bn business continuity package unveiled by Chancellor Rish Sunak last week.
The loan schemes include:
- The Coronavirus Business Interruption Loan Scheme - government-backed loans of up to £5m to small and medium businesses.
- The Bank of England’s ‘Covid Corporate Financing Facility’ - a quick way to raise working capital for large firms.
- A business information campaign to ensure that businesses are aware of support available.
Businesses can access the government support from today (Monday 23 March). Full details of the two new loan schemes are still being confirmed but the £330bn in loans and guarantees will be available for applications from today, the government says.
The new support schemes are in addition to the Chancellor’s announcement on Friday of the ‘Coronavirus Jobs Retention Scheme.’ This will provide a grant by the end of April to employers to keep workers on. Salaries will be paid at 80% of their current level up to a maximum of £2,500 per month. The Chancellor will also allow firms to defer VAT bills and there are also reports that the Chancellor will soon announce measures to help the UK's 5m self employer workers.
For small and medium sized firms with a turnover of up to £45m, the new Coronavirus Business Interruption Loan Scheme is available for applications. Firms can access loans of up to £5m each.
Interest payments and any lender-levied fees for businesses will be covered by the Government for an initial period of up to 12 months. The scheme is available through more than 40 accredited lenders listed on the British Business Bank website.
The Bank of England’s new lending facility for larger firms – the Covid Corporate Financing Facility - will also be open for applications from this morning.
By purchasing short-term corporate debt the scheme provides a “quick and cost-effective way” to raise working capital for companies who are “fundamentally strong” but are experiencing severe disruption to cashflows, the government says.
The scheme is open to firms that can demonstrate that they were in sound financial health prior to the impact of Coronavirus. Companies who wish to use the scheme do not need to have issued commercial paper before.
Chancellor of the Exchequer Rishi Sunak said: “We are working round the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”
Bank of England Governor and former FCA chief executive Andrew Bailey said: “The new lending scheme, the Covid Corporate Financing Facility, will open to help businesses manage through this period of uncertainty. Combined with steps taken by the Government, this will help companies through this difficult time and support the needs of the people of this country.”
- Information on the Covid Corporate Financing Facility is available on Bank of England’s website and will be updated during today (Monday 23 March). Businesses can talk to their lenders from the start of the day about accessing these loans.
- Information on the Coronavirus Business Interruption Loan is available through the British Business Bank. Interest and fees on the loans will be paid by the government the first 12months, making them interest free to customers.
- The new business information campaign has gone live with updated information available here.