Coronavirus Business Loan - Key Features and How to Apply

With Coronavirus causing an economic and health crisis, many businesses have found themselves unexpectedly in a tough situation.

If your business is struggling to pay bills or has limited cashflow to operate as it normally would, lenders can offer a government-backed business loan to get you through this period.

Here are some key features and requirements of business loans, please note, the specifics will vary based on your application and the lender you borrow from.

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How much can I borrow?

You can apply for a loan between £25,001 and £5,000,000.

How long can I borrow for?

Flexible terms allowing you to spread the repayments of your loan from 1 to 6 years 

What interest will I have to pay?

This varies from lender to lender however, some schemes will be offering an interest free period of up to 12 months.

Do I need to pay an early repayment fee?

No, there are no charges for repaying the loan early.

Do I need to provide security on the loan?

As businesses are liable in full for the debt, lenders may ask for personal guarantees and security over business assets to support the borrowing facilities.

What is the lending criteria?

In order to access business funding, you must:

• Be a UK based business impacted by Coronavirus (Covid-19)
• Have a borrowing proposal which, were it not for the Covid-19 pandemic, would be considered viable and for which the provision of finance will enable trading out of any short-to-medium term difficulty
• Operate in the UK
• Have a group turnover of no more than £45 million
• Can afford to repay the borrowing over a period up to 6 years
• Smaller businesses from any sector can apply for the full amount of the facility

What is required in the application?

This depends on the lender that is best suited to your situation, but in general, you should expect to provide:

• 3 years of financial accounts and the latest management information where this is available. This will need to show 2019 trading performance and demonstrate the business’ affordability and cash flow.
• 6 months of business and personal bank statements
• A complete Statement of Assets, Liabilities, Income and Expenditure
• What, if any, security is being offered?
• Details of how you have come to request the specific loan amount
• Impact statement around how COVID-19 has affected the business
• Details of any other options you have been explored (furlough, rate relief, time to pay arrangements etc.)
• Information on how long you believe it will take your business to start recovery after the Coronavirus and what challenges you will face (e.g. future loss of contracts/staff availability, stock levels etc.)
• What changes is the business making in the short to medium-term to help drive business performance back to either pre-coronavirus levels or beyond?

These are the minimum requirements of most lenders and some will require additional information. The quicker you can provide the relevant information to your broker, the quicker the application can be submitted.

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How do I apply?

Get in touch with your finance broker and explain your situation to them. They will then suggest the best route of action and will help you with your application.

At Ramsay & White, we are able to help small to medium-sized businesses through this difficult period and offer a range of options with market-leading rates. Our full team is still working remotely to ensure our clients get the best funding solution during this time.