COVID-19: different types of loan funding. All loan funding is repayable. 

The following loan funds have been announced during the ongoing Coronavirus pandemic.

  • Microbusiness 'Bounce back' loans: open until 31 January 2021. 
  • Coronavirus Business Interruption Loan Scheme: open until 31 January 2021.
  • COVID-19 Corporate Financing Facility: closed on 9 October 2020.
  • Future Fund convertible loan scheme: open until 31 January 2021.

Microbusiness 'Bounce back' loans

  • The loan is available to UK based small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
  • The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
  • The scheme is open to applications until 31 January 2021.
  • The business must have been:
    • Established before 1 March 2020.
    • Adversely impacted by the Coronavirus.
    • Not an ‘undertaking in difficulty’ on 31 December 2019.
    • Not already claiming under the Coronavirus Business Interruption Loan Scheme or Corporate Financing Facility. 

See Apply for a Coronavirus Bounce Back Loan  

Coronavirus Business Interruption Loan Scheme

  • Applies to UK based medium and large-sized businesses with a turnover of over £45 million.
  • The government guarantees 80% of the finance to the lender.
  • The scheme is open to applications until 31 January 2021.
  • The same criteria and rules apply as for the SME CBILS. Banks, building societies, insurers and reinsurers (but not insurance brokers) and public-sector organisations, including state-funded primary and secondary schools are all excluded from the scheme.

See British Business Bank: Coronavirus Business Interruption Loan

Larger business: COVID-19 Corporate Financing Facility (CCFF)

  • A lending facility for larger businesses to raise working capital via the purchase of short-term debt.
  • The minimum amount of £1 million. 
  • This will support companies who can show they were in 'sound financial health' prior to the COVID-19 shock, to enable them to continue financing their short-term liabilities.
    • 'Sound financial health' means a short-term credit rating of A3/P3/F3/R3 or above, or a long-term rating above BBB-/Baa3/BBB- by at least one of the major credit rating agencies.
    • If firms do not have an existing credit rating from one of the major credit rating agencies, they or their bank should get in touch with one of them to seek one. This should be in a form that can be shared with the Bank of England and HM Treasury and note that the reason for seeking the rating is so that the firm may use the CCFF.
  • The Bank will also support corporate finance markets overall and ease the supply of credit to all firms.
  • Businesses should start with their own banks. If they are not able to issue commercial paper there is a list of other banks who do with contact details on the UK Finance website.
  • Although it was announced that facility will be available for at least twelve months, it appears closed on 9 October 2020.

See Bank of England: COVID Corporate Financing Facility

Future Fund convertible loan scheme

  • The ‘Future Fund’ scheme is operated by the British Business Bank and opened on 20 May 2020.
  • It offers unsecured bridge government funding of up to 50% of the total bridge funding received by a company, where the remaining amount is provided by private third party investors. 
  • To be open to companies with a UK economic presence who have raised at least £250,000 in the last five years.
  • The bridge funding will automatically be converted into equity on the company's next qualifying funding round.
  • The minimum lending from the Government under the scheme will be £125,000, up to a maximum of £5,000,000.
  • The minimum interest rate for the government will be 8% and the loan will mature after a maximum of 36 months.
  • The application deadline for loans from the Future Fund has been extended to 31 January 2021.

See COVID-19: Future Fund convertible loan scheme

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