How to get financial support for your business during the Coronavirus pandemic

The British Business Bank has announced changes to the Coronavirus Business Interruption Loans Scheme. These changes could see previously rejected businesses now being eligible for the scheme. 

Read more in our story How has the Coronavirus Business Interruption Loans Scheme changed?

It has been reported that businesses are struggling to access the financial support measures recently announced by the Government. A series of schemes were launched to support the self-employed and small businesses, including the Self-Employed Income Support Scheme, Small Business Grant Fund and the Coronavirus Business Interruption Loan Interruption Scheme. However, these are starting to attract criticism, as businesses face delays to access the cash from these schemes and a lack of clarity about their eligibility for them.

We’ve looked at some of the questions we have received from small business owners and have shared our responses below.

The guidance for the small business grant fund (SBGF) states that property used for personal purposes, even if shared with business use, is not included in the scheme. However, if your business premises is only used for business, then you should qualify for the scheme. You should contact your local authority through its website to find out more information.

Under the Coronavirus Business Interruption Loan Scheme (CIBLS), loans below £250,000 may not require a personal guarantee but this is at the discretion of the lender. Loans over this value will need to be secured against an asset and may come with the requirement of a personal guarantee from the directors of the business. A personal guarantee means that if the business defaults on CIBLS, then the personal property of the directors may be used to recover the debt. The CIBLS includes an important exclusion to this, and it does not allow lenders to use the main personal residence of the directors under this guarantee. However other property and assets owned by the directors is at risk.

CIBLS has a range of lenders offering the scheme, including some mainstream banks and more specialist lenders. Before the Coronavirus pandemic, high street banks and specialist lenders usually had different rates of interest. The banks would offer the most competitive rates of around 7% but to only to the strongest businesses, while the specialist lenders in general would accept more risk, but in return for higher rates of 20% to 40% and even higher in some cases. CIBLS does offer 12 months interest-free credit, but the ‘more attractive terms’ cited by the Chancellor when he first announced the scheme have not yet materialised into lower rates.

You can qualify for a Retail, Hospitality and Leisure Grant (RHLG) if your business was receiving the Expanded Retail Discount on 11 March 2020. The amount you can receive will depend on the rateable value of your business premises and how many properties you have. If your restaurant has a rateable value of up to and including £15,000 then you will receive £10,000. Properties over £15,000 and up to £50,999 will receive £25,000.

The latest guidance from the Government states that if your business is eligible for the SBGF, you will not be eligible for the RHLG.

If your rates qualify for small business rate relief, then you should qualify. The guidance from Government states that landlords and managing agents should support local Government to identify the correct taxpayer. You should contact both (use the online contact form or email for your local council) to let them know you are the ratepayer.

Most lenders are now able to offer a buy-to-let mortgage payment holiday. The range of times to respond to requests is from a few days to a few weeks depending on who your mortgage lender is. All lenders are offering online forms and self-certification to try to improve response times. Check your lender’s website first to find if they offer this and how to apply.

It has been reported in the media that the Chancellor is set to announce changes to the Coronavirus Business Interruption Loan Scheme as soon as tomorrow. This may see a change of rules for personal guarantees and the removal of the need for lenders to assess if small businesses can access other lending options first.

We will publish an update on this as soon as the details have been announced.