Rishi Sunak, the Chancellor has announced that the deadline to apply for a Coronavirus Business Interruption Loan and a Bounce Back Loan has been extended to the end of November. The series of measures to support businesses during the winter months and then beyond has been called ‘pay as your grow’.
The Government backed business interruption loan schemes were all launched on different dates and as a result had different end dates. The CBILS loans were due to end this month, with the Bounce Back loans closing to new applications at the start of November. Following the application extension more businesses now have the opportunity apply for loans to help them to continue to operate through the difficult period ahead.
The maximum term for CBILS and Bounce Back loans have also been extended from six years to 10 years, those businesses that need to free up cashflow can extend their loan terms to drastically reduce their monthly payments. With the downside being a greater charge in total interest costs.
What is not clear right now is the impact upon CBILS lenders as they try to fulfil new loan applications while also adjusting existing loans to longer terms. Over 20,000 business applied for CBILS between 16 August and 20 September, with only just over 6,000 being accepted. The early stages of the Covid-19 crisis led to operational struggles in the banking sector with many CBILS lenders restricting their loans to existing customers or small geographical areas or industries.
The Chancellor also announced a new business loan scheme would be launched in January.
The hospitality sector had their VAT cut to 5% extended to until March 2021.