Last week, the British Business Bank updated on progress pertaining to loans given to UK firms impacted by the ongoing COVID-19 health crisis. Originated under several government programs designed to support businesses during a difficult time, the Bank said that 1,630,155 government-guaranteed loans worth £75.1 billion have been given to firms struggling during the economic challenge.
The British Business Bank said the amount includes 1,531,095 Bounce Back Loans (BBLS) worth £46.5 billion, 98,344 loans worth £23.3 billion through the Coronavirus Business Interruption Loan Scheme (CBILS), and 716 loans worth £5.3 billion through the Coronavirus Large Business Interruption Loan Scheme (CLBILS). The Bounce Back Loan Scheme Top-Ups delivered 101,666 loans that have been approved valued at £900 million.
The UK government has determined that the CBILS, the CLBILS, and the BBLS all close on March 31, 2021. The new Recovery Loan Scheme will open for applications on April 6, 2021.
The program designed to support early-stage ventures that may not be able to qualify for a loan, the Future Fund, has now issued £1.2 billion worth of convertible loans for 1,236 companies since the fund opened for applications on 20 May.
This sum has been matched by at least the same amount from third-party investors including crowdfunding platforms like Seedrs and Crowdcube. The Future Fund closed for applications on January 31, 2021. Regarding the other loan programs both traditional financial firms and Fintechs participated in offering loans to impacted businesses.
A brief description of the loan programs is outlined below.
Bounce Back Loan Scheme (BBLS)
BBLS is a demand-led scheme offering lending that targets small and micro businesses, providing loans from £2k up to 25% of the business’ turnover with a maximum loan of £50k. Providing lenders with a 100% government-backed guarantee and standardising the application form has led to a faster process with many loans becoming available within days. The Bounce Back Loan Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year. The scheme will be open until 31 March 2021.
Coronavirus Business Interruption Loan Scheme (CBILS)
CBILS is a demand-led scheme offering lending to smaller businesses with turnover of up to £45m. Invoice finance and asset finance facilities are available from £1k to £5m, while term loans and revolving credit facilities are available from £50k to £5m. The government makes a payment to cover interest and lender-levied fees under CBILS for the first 12 months. The scheme will be open until 31 March 2021.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
CLBILS is a demand-led scheme targeted at larger businesses with a turnover of more than £45m. CLBILS can be used to support term loans, revolving credit facilities, invoice finance facilities, and asset finance facilities. The maximum amount available through CLBILS to a borrower and its group is £200m. Term loans and revolving credit facilities over £50m are offered by CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance facilities and asset finance facilities is £50m. Companies borrowing more than £50m through CLBILS are subject to further restrictions on dividend payments, senior pay, and share buy-backs during the period of the loan. The scheme will be open until 31 March 2021.