Government Loan Scheme Application Guidance

From today the Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank and available for small businesses that may be affected by cash flow interruption. The full details, specifications and eligibility are being defined, and may be subject to change, but as a minimum a business must:

  • Be UK based, with turnover of no more than £45 million per annum
  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations)

Note that the borrower always remains 100% liable for the debt.

We are sharing guidance from our banking partner NatWest on how to prepare for a potential Loan Scheme application. They have provided a short checklist of information they anticipate businesses will be required to provide. Their advice is to be fully prepared to provide supporting financial information, commentary and a detailed thought process around how COVID-19 has impacted your business, so as not to delay your application and as the need must be proven to be a direct result of the impact of COVID-19. Refinancing existing debt is unlikely to be a permitted use for the funds.

Checklist of information (but not limited to):

  • Latest Annual Accounts
  • Management Accounts
  • Aged debtor and creditor listings
  • Budgets (profit & loss) and cash flow forecasts with commentary on how the business originally expected to perform at the start of the year (original budget) and how you expect COVID-19 to impact on your business with a best guess as to a revised budget
  • When COVID-19 is over, roughly what your business will deliver (once back to normal)

NatWest has agreed for us to share a template to demonstrate original and revised budgets to help businesses better visualise the impact of COVID-19.

In the meantime, there are other suggested ways to preserve cash flow, for example a time to pay arrangement with HMRC and speaking to landlords about a rent deferment. Bear in mind banks will have expected you to have had these conversations prior to applying for a loan.

We hope you find this information useful, however we are aware that loans may not be suitable for all businesses and therefore we are engaging directly with the government in order to understand the grants that will be available to meet the needs of the industry.

Download the NatWest checklist template here.

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