Loans Guide For Small Business and Self-employed
If you are a small business or are self employed, you may be heavily impacted by the coronavirus pandemic and cash-flow is essential for you to keep you business afloat. There are a range of financial services for those whose income has been affected with a number of loans and grants of which you you may not be aware. Here is a summary of loans for small business and the self employed that are currently available.
Government Backed Schemes
Bounce Bank Loan
Launched Monday 4th May 2020, the Bounce Bank Loan is a new government scheme helping small and medium-sized businesses affected by COVID-19 to access loans of up to £50,000. Businesses can borrow between £2,000 and £50,000. The government will guarantee 100 per cent of the loan and there will not be any fees or interest to pay for the first 12 months. Loan terms will be up to 6 years. No repayments will be due during the first year. The scheme will be delivered through a network of accredited lenders. You can apply for a loan if your business is based in the UK and has been negatively affected by coronavirus.
Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses affected by coronavirus (COVID-19). The scheme helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million. The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months. You can apply for a loan if your business: is based in the UK; has an annual turnover of up to £45 million. You need to show that your business: would be viable were it not for the pandemic has been adversely impacted by the coronavirus. If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019. The maximum length of finance is up to 3 years for overdrafts and invoice finance facilities or up to 6 years, for loans and asset finance facilities. There are over 50 lenders participating in the scheme including all the main retail banks.
Self Employment Income Protection Scheme
The Self Employment Income Protection Scheme allows you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500. If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work. The grant will be subject to Income Tax and self-employed National Insurance. HMRC will work out if you’re eligible and how much grant you may get. You can claim if you’re a self-employed individual or a member of a partnership and you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23rd April 2020 for that year; you traded in the tax year 2019 to 2020; you intend to continue to trade in the tax year 2020 to 2021. Your business could be adversely affected if, for example you’re unable to work because you: are shielding; are self-isolating; are on sick leave; have caring responsibilities – or you’ve had to scale down or temporarily stop trading because: your supply chain has been interrupted; you have fewer or no customers or clients or your staff are unable to come in to work.
The government has also launched a new “support finder” tool which helps businesses and self-employed people across the UK quickly and easily determine what financial support is available. For more information visit Be the Business
Social Investment Business
Social Investment Business, alongside Big Society Capital and other social investment partners, will be managing the £25 million Resilience & Recovery Loan Fund (RRLF) providing repayable finance to charities and social enterprises directly affected by COVID-19. RRLF will offer emergency loans with flexibility in terms, including 12-month interest-free and no arrangement fee, with no personal guarantees required. More information on the RRLF can be found here.
Main photo: Mika Borgia