Bridging Finance News:- All viable SME businesses will now be eligible for the coronavirus business interruption loan scheme, the chancellor Rishi Sunak has announced.
The government is also going to stop banks from asking for personal guarantees from directors for loans under £250,000. Loans over this sum will need personal guarantees of 20 per cent of the amount after recovery of other business assets.
Mr Sunak said: “We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country.
“And now I am taking further action by extending our generous loan scheme so even more businesses can benefit.”
He said the government would make operational changes to speed up lending approvals and would continue to cover the first 12 months of interest and fees.
| Product | Max LTV | Up to 50% LTV | 50.01 – 65.00% LTV | 65.01 – 75.00% LTV | Term & Repayment | Arrangement Fee |
|---|---|---|---|---|---|---|
| Residential Including Light Refurbishment | Up to 75% Lower of PP or MV | 0.43% pm | 0.53% pm | 0.60% pm | Maximum term 24 months No minimum interest or ERCs Interest Fully Rolled Up, Part-Rolled Up or Serviced (subject to affordability) The net advance will be less total potential interest over the term with the gross loan calculated as interest for the entire term and the arrangement fee added. | 1% -1.5% Full fee added to the loan. |
| Semi Commercial Including Light Refurbishment | Up to 75% Lower of PP or MV | 0.6% pm | 0.6% pm | 0.6% pm | ||
| Commercial Including Light Refurbishment | Up to 70% Lower of PP or MV | 0.75% pm | ||||
| Residential Heavy Refurbishment | Up to 75% Lower of PP or MV | 0.60% pm | 0.65% pm | 0.7% pm | ||
| Commercial and Semi Commercial Heavy Refurbishment | Up to 70% Lower of PP or MV | 0.83% pm | 0.83% pm | 0.7% pm | ||
Half of the Federation of Master Builders’ members had complained the coronavirus business interruption loan, CBILS, process was difficult with 29 per cent believing they wouldn’t be eligible.
Federation chief executive, Michael Berry, said: “I am hearing time and time again about members who have been told by their bank that they will get back to them and never do, and others who have had to wait for hours on the phone to speak to their bank manager.”
His organisation wants the government to work with the state agency Homes England, and other devolved administrations, to help keep SME housebuilders afloat.
Mr Sunak also announced a ‘new’ coronavirus large business interruption loan scheme, CLBILS. The scheme will offer an 80 per cent government guarantee for up to £25m of credit to companies with turnovers of £45m to £500m.
“This will give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS,” said Mr Sunak.
More news on government-backed lending expected
He added the loans would be offered at commercial interest rates and he would make further announcements later in the month about the scheme.
The chancellor said he would be speaking to bank chief executives next week to discuss how the schemes are working and ensure everybody is playing their part.
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Brokers Hank Zarihs Associates said the development finance lenders welcomed the move as cashflow was essential for enabling housebuilders to carry on.
UK Finance said banks had received more than 130,000 enquiries from businesses across the country for the government-backed loans.
Mr Sunak said more than £90m of loans to nearly 1,000 small and medium-sized firms have been approved under the government’s scheme since its launch last week.
