BBB sets out further details on recovery loan scheme
The British Business Bank has set out further details of the Treasury’s new recovery loan scheme.
The scheme, unveiled by Chancellor Rishi Sunak in his Wednesday Budget, will run to the rest of the year, subject to a review.
It will replace the existing coronavirus business interruption loan scheme (CBILS), bounce back loan scheme (BBLS) and coronavirus large business interruption loan scheme (CLBILS) which will all end on 31 March.
The British Business Bank said that the new successor scheme will launch on 6 April and aims to help businesses affected by Covid-19.
It can be used for any legitimate business purpose, including managing cashflow, investment and growth and is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.
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The scheme, which has have a maximum facility of £10m, will provide loans from £1,000 for asset and invoice finance and from £25,001 for term loans and overdrafts.
There will be no turnover restriction for businesses accessing the scheme and businesses will be able to choose from a wide range of products including term loans, overdrafts, asset finance and invoice finance facilities.
Term loans and asset finance facilities are available for up to six years while overdrafts and invoice finance are available for up to three years.
Interest and fees to be paid by the business from the outset with businesses required to meet the costs of interest payments and any fees associated with the facility.
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Businesses which had already taken out a CBILS, CLBILS or BBLS loan will be able to access the new scheme, although the maximum they are allowed to borrow will depend on their lender’s assessment and scheme requirements.
Lenders will be required to undertake credit and fraud checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.
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“The Chancellor has confirmed the British Business Bank’s central role in the next phase of the UK’s economic recovery from Covid-19,” said Catherine Lewis La Torre, chief executive of the British Business Bank.
“As businesses begin to plan for the post-Covid period, they will need targeted finance to support them.
“We welcome today’s announcement of two new schemes, one to provide debt finance to a broad range of businesses, and the other to invest equity alongside the private sector in fast growing innovative firms.
“Both schemes will help drive the innovation and growth needed to support the UK’s long-term prosperity.”