The government is working with banks and lenders to improve access to much-needed financial support during the Coronavirus crisis. We take a look at what’s being made available.
This page was update on 1st April 2020
With the outbreak of Covid-19 likely to have a significant impact on global supply chains, consumer spending and business investment over the coming months, the financial sector is having to respond quickly to the needs of affected businesses.
The Bank of England has reduced the base interest rate from 0.75 per cent to 0.25 per cent, backed with a special ‘SME Term Funding Scheme’ to make sure the benefits of the reduction are transmitted effectively to SMEs.
The Government's Response
The government has announced a temporary Coronavirus Business Interruption Loan Scheme (CBILS) to encourage lending to businesses that may otherwise be turned down for finance due to inadequate security.
Delivered through the British Business Bank, the scheme will provide lenders with a government-backed guarantee on their loans to SMEs with a turnover of less than £45 million. It will support overdrafts, invoice and asset finance, and term loans, from £1,000 to £5 million in value and will be available from Monday 23 March.
Any business interested in the scheme should approach their bank or finance provider in the first instance.
What are highstreet banks offering?
Banks are also responding with their own offers. These include, but are by no means limited to:
- Lloyds Bank: £2 billion of ‘arrangement fee free’ finance has been made available to firms with a turnover of up to £25 million. The worst affected businesses may also qualify for repayment holidays.
- NatWest: A £5 billion fund has been created to support SMEs, including temporary emergency loans and repayment holidays. No fees will be charged on business overdrafts of up to £5,000.
- HSBC: £5 billion has been allocated from the bank’s SME Lending Fund, with the bank ready to consider offering repayment holidays, reviewing overdrafts or trade loans to allow stock to be held for longer, and providing trade finance solutions to support customers with their supply chains. Support for firms trading internationally has also been reviewed and consideration can be given to 60-day extensions on trade loans and fast turnaround on the issuance of Shipping Guarantees.
- Barclays: 12-month capital repayment holidays have been made available on existing loans of over £25,000, as well as increased or new overdraft facilities and other working capital solutions.