COVID-19: Government loan scheme

The government loan scheme has been introduce by the UK government to help businesses to survive the downturn caused by measures to defeat COVID-19.

The Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme provides access to bank lending and overdrafts in order to support small and medium-sized businesses during the pandemic and is expected to start on 23 March 2020.

Guarantee for loans and interest

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

In addition, businesses will be able to access the first 12 months of that finance interest free, as the government promises to cover the first 12 months of interest payments.


The scheme will be supervised by the British Business Bank which maintains an accredited list of lenders that includes all major banks.

Eligible businesses will need to satisfy the following criteria:

  1. Be UK based, with turnover of no more than £45 million per annum
  2. Operate within an eligible industrial sector
  3. Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
  4. Be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term.

In order to allow lenders to act quickly, employers are advised to contact their bank or finance provider as soon as possible to discuss their business plans.

In addition, those with existing loan facilities are advised to ask their lenders for a repayment holiday to help with cash flow.

COVID-19: Government loan scheme

Business plans

The coronavirus business interruption loan scheme is a purely commercial arrangement between the business and their lenders with the government providing guarantees. The borrower always remains 100% liable for the debt.

Therefore, businesses will be expected to produce business plans along with cash flow projections to justify their application to access funding under the Coronavirus Business Interruption Loan Scheme.

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