The governments emergency loan structure, comprising of the Bounce Back Loan Scheme, Coronavirus Large Business Interruption Loan Scheme, Coronavirus Business Interruption Loan Scheme, and the Covid Corporate Financing Facility is being replaced this month by the new Coronavirus Recovery Loan Scheme, which will open on 6th April.
Over 1.6 Million firms have taken advantage of emergency COVID loans, with nearly £180 Billion lent over the various schemes. Bounce Back Loans alone accounted for £46.5bn worth of lending to an estimated 1.5m businesses, targeted primarily at SMEs, with an average of 3 BBL's per minute accepted at one point.
On the Bounce Back Loan Scheme in particular, Chancellor Rishi Sunak commented, "I’m delighted that our Bounce Back Loan scheme worked so effectively that it issued three loans every minute since its launch last May. That means every 20 seconds a hardworking small business owner benefited from this support".
However the scheme has come under fire for reported misuse as well as taxpayer cost in the government having to maintain the scheme, with the AAT arguing that writing off legitimate bounce back loans to genuine borrowers would immediately save the taxpayer money as the state will no longer be obliged to make the interest payments for the remainder of the interest free period.
The new Recovery Loan Scheme will run until 31 December 2021 and will ensure lenders continue to have the confidence to provide support, and viable businesses can access government-backed finance (with the government guaranteeing 80% of loan amounts to lenders) for term loans, overdrafts, and invoice and asset finance. The maximum loan size across all products is £10m; the minimum loan size is £25,000 for term loans and overdrafts, and £1,000 for invoice and asset finance. Lending criteria and process is still to be published, however it will almost certainly be more in depth process than the BBL, and more akin to CBILS.
As ever, we can help support your business through a funding application.