Personal guarantees removed by banks for Coronavirus Business Interruption Loan Scheme
Barclays, Lloyds, Royal Bank of Scotland and HSBC have all confirmed personal guarantees are no longer required to access smaller loans through the government’s Coronavirus Business Interruption Loan Scheme, which is designed to support small and medium-sized businesses affected by the COVID-19 pandemic.
Barclays, Lloyds and HSBC will not request personal guarantees on loans up to £250,000, and Royal Bank of Scotland, which also owns NatWest, has said it will not request personal guarantees from businesses applying for a business interruption loan.
The change follows concerns from businesses that, under the previous rules, banks would require a personal guarantee that could see assets owned by company directors seized if the loan was not paid back.
Barclays, Lloyds and HSBC have since amended their terms and conditions. No changes were required at Royal Bank of Scotland / NatWest as the bank did not request personal guarantees for the government loan.
Colin Bell, Business Growth Director at the North East LEP, said: “Banks and lenders need to be doing everything they can to help businesses through this enormously challenging time.
“By removing the need for personal guarantees, businesses can borrow with confidence, which is essential when there is still so much uncertainty around when businesses will be able to trade as normal.”
The temporary Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years.
The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.
It is important to note that each bank/lender will offer differing terms and conditions. Please review them carefully before signing up for the Coronavirus Business Interruption Loan Scheme.