20th April 2020 | The Coronavirus Business Interruption Loans UK

Today Simon Playfair, Managing Partner at Playfair Partnerships, talks through what we do and don't know about the Coronavirus Business Interruption Loan scheme set up by the UK Government:

- Loans of up to £5 million per business up to a period of 6 years
- Aims to cover business losses and cash shortages caused by the virus
- Current practice from banks & lenders: businesses have to pass the normal credit tests and be a viable business in those terms before they can lend to you. The government wants to potentially relax these rules
- Loans are interest free for up to 12 months - there is a payment holiday for 6 months, with some banks extending this to 12 months
- There cannot be a personal guarantee for loans up to £250,000 in value - above that it is capped at 20% of the outstanding loan balance. This is at the discretion of the bank
- Banks are restricted from taking your primary address as security

We are consistently seeing from our partners and banks the need for good management information, forecasts, minimum cash forecasts showing the baseline pre-virus and the reduced forecast effect of the virus in terms of the deferred/no income or delayed debtors, as well as information showing what you have put in place to mitigate this cash shortage (VAT deferrals, self-assessment, furloughing workers, cutting expenditure etc.)

Whilst many people are looking at the next 3 months, we suggest looking further ahead to forecast what your cash shortage will be when these schemes are reversed and you have made all the payments to catch up. This will enable you to look at the payment terms of the loan and can help you decide whether to take the 12 month payment holiday as well.

As the situation progresses and when we know more we will provide further updates and clarification.

If you would like more information or help with business strategy and financial management, please contact us at:
mail@playfairpartnerships.com
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Playfair Partnerships is a business advisory firm specialising in business strategy and financial management.

As we are currently unable to meet business owners and managers in person due to the current situation with Covid-19, we are creating a series of videos surrounding some of the key issues and information surrounding businesses at this time.

We will be drawing on our experience with businesses during this situation to update you on what we have found and what we know based on updates from the UK Government and banks.

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