With BBLS and CBILS ending this month the British Business Bank announced a new scheme backed up with a Government Guarantee to offer all businesses support to trade out of the effects of lock down.
The good news is that there are no turnover restrictions and up to £10 Million available with access to a range of financial products from term loans and overdrafts to asset and invoice finance. You need to have been impacted by the coronavirus pandemic and be a viable.
All good so far.
Understandably there will be no additional financial support so interest and fees need to be paid by the business from the outset.
How is it going to work?
New lenders from traditional high street banks to challenger banks, alternative lenders and peer to peer platforms have to be approved by the British Business Bank to join the scheme and they will decide how much you can borrow and may overlook concerns over short-to-medium term performance but will be making the assessment on their own criteria of affordability and security.
So the devil may be in the detail.
Existing debt including COVID support scheme loans together with performance in 2020 year end accounts will be major factors in deciding how much additional lending a company can afford to pay back. There are no personal guarantees on facilities of up to £250k so the 80% Government Guarantee leaves up to £50,000 at the lenders own risk taking away cover that the banks have traditionally relied on to protect their shareholders.
Loss making or marginally profitable businesses may struggle in this new environment so addressing demand early and looking at a wide range of potential solutions could be key.
Is there any point in even applying?
Fortunately beauty is in the eye of the beholder and its undeniable that funds looking for a return on capital have to lend it out. Lending to a UK company in a recovering economy with a UK Govt. Guarantee for most of the debt will be attractive to many and offer relief to some companies.
You just have to find the right partner to help you.