There has been considerable commentary in the media about this support initiative as business owners – struggling to cope with the reduction in their cash resources due to the COVID-19 outbreak – are finding it difficult to secure support from their bank.
Readers will be encouraged by the Chancellor’s recent comments when he confirmed that personal guarantees should not be requested for loans under £250,000.
The government’s offer to guarantee 80% of loans taken out and cover all the set-up and interest charges for the first year of the loan remains an attractive solution for businesses that need the additional liquidity.
If you are considering an application you will be required to produce certain evidence to back-up your request. This is likely to include:
- Management accounts
- Cash flow forecast
- Business plan
- Historic accounts
- Details of assets
The above requirements will vary from lender to lender.
An alternative scheme for micro-sized businesses
Smaller businesses may decide to apply for the “Bounce-Back” Loan Scheme that is now available. Loans can be obtained between £2,000 to £50,000 but limited to 25% of turnover.
These smaller loans are 100% guaranteed by government and with no fees or interest charges payable for the first year.