Chancellor Rishi Sunak (pictured) recently announced that the government’s emergency loan schemes have been extended until 31 January 2021, in response to ongoing demand for financing solutions and a prolonged economic dip amid the pandemic.
We have compiled a guide to the four loan schemes on offer and the role that P2P lending plays in helping the government support UK business.
Coronavirus business interruption loan scheme (CBILS)
More than 100 lenders are now signed up to offer CBILS loans – including P2P lenders Funding Circle, LendInvest, Assetz Capital, Folk2Folk and LendingCrowd.
Businesses can borrow anything between £51,000 and £5m, at a maximum interest rate of 14.99 per cent, with no interest fees for the first year.
Since the scheme was introduced in March, more than £17bn has been distributed to small- and medium-sized enterprises (SMEs) across the UK.
Coronavirus large business interruption loan scheme (CLBILS)
Similar to CBILS, this scheme is specifically designed to be used by mid-sized and large-sized UK businesses which have a group turnover of more than £45m. Initially, CLBILS providers were limited to offering credit facilities of no more than £50m per business, but in May the government increased this limit to £200m.
By the end of October 2020, almost £5bn had been loaned to businesses under the scheme.
Former P2P platform ThinCats is the only alternative lender which has been approved to offer CLBILS funding.
Bounce back loan scheme (BBLS)
By far the most popular of the government’s four coronavirus loan schemes, the BBLS is aimed at small businesses, partnerships and sole traders. More than £40bn has been distributed to date, to more than 1.3 million businesses.
This loan scheme offers up to £50,000 to struggling businesses, at a fixed interest rate of 2.5 per cent per annum. The first year of the loan is interest-free, and the government provides 100 per cent backing of each BBL.
Funding Circle is the only P2P lending platform to win authorisation to offer bounce back loans.
The future fund allows UK-based companies to borrow between £125,000 and £5m from the government, just as long as they can match their funding from private investors.
Several P2P platforms and other alternative lenders were quick to take advantage of the scheme. Assetz Capital used a Seedrs crowdfunding campaign to raise more than £750,000 from private investors. This was matched by the future fund, creating a £1.5m funding boost.
FutureBricks also plans to use the future fund to double the value of its Seedrs campaign. At the time of writing, more than £365,000 had been raised from Seedrs investors, surpassing the platform’s target of £320,000.
Between May and October, 745 convertible loans were approved under the future fund, with a total value of £770.8m.