The Chancellor stated on the 17th March that the coronavirus pandemic is a public health emergency. But it is also an economic emergency. Businesses’ and individuals’ anxiety about the virus itself is matched only by their anxiety about their livelihoods.
In response, the Chancellor announced on Budget Day and on the 17 March that he would “do whatever it takes to support the economy” from the impact of the coronavirus. He announced a number of proposals that included:
- Government-backed loans to SMEs delivered through the British Business Bank
- Government-backed loans for large businesses delivered through the Bank of England
Government-backed loans to SMEs of up £5 million administered through the British Business Bank to £5 million in value. (Click here for more information)
The setup of a temporary Coronavirus Business Interruption Loan Scheme that will be delivered via the British Business Bank to support SME businesses to access lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan 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.
All SME businesses can apply for the loans from 23 March 2020.The Chancellor has stated no interest will be charged for the first six months of the loan period. The British Business Bank will be working with its current Enterprise Finance Guarantee delivery partners and the government to make the new scheme available and to implement the package of enhancements.
Corporate Financing Facility for larger businesses available through the Bank of England (click here to find out more)
For large businesses there is to be a special funding arrangement, the Covid Corporate Financing Facility (CCFF), available through the Bank of England. Businesses will need to issue special corporate bonds which the Bank of England will purchase to give businesses the liquidity needed during this difficult period.
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For further support and advice relating to the impact of COVID-19, please view our COVID-19 Advisory Service page.