On 27 April 2020, the Chancellor announced a new fast-track loan scheme to aid small businesses. Whilst we await further details, as at 28 April the key point are as follows:
- Loans will be available in amounts of between £2,000 and £50,000
- They will be 100% guaranteed by Government. Personal guarantees will not be required
- The Government will cover interest and lender-levied charges for the first 12 months. After that the borrower will be liable for interest at a “low standardised rate”
- No repayments will be required during the first 12 months
- Loans can be applied for using a short online application form
- The scheme will launch for applications on Monday 4th May
- Loans will be accessed through “accredited lenders” – check with your bank if it is an accredited lender
- Loans “should reach businesses within days”.
There are three important things to note. First, these loans have to be repaid – they are not grants. Secondly, if you are a sole trader, you will be personally liable for repayment of the loan. Thirdly, if you trade through a company or limited liability partnership, whilst there is an intention to relax the insolvency provisions around wrongful trading (but not any of the other insolvency provisions such as misfeasance and/or undertaking transactions which are at an undervalue or as a preference) and a director’s personal exposure as a consequence of doing so (back-dated to the beginning of March), directors are still obliged to comply with all their usual statutory duties as required by the Companies Act 2006.
We will provide an update when we have more information. In the meantime, if you wish to take advantage of this scheme, we recommend that you check with your bank that they are an accredited lender and, if not, contact us for assistance.