Understanding UK Government Backed Loans

In today’s economy, starting or growing a business can be a daunting task. However, the UK government has created various loan schemes to support businesses in their financial endeavors. These loans are designed to help businesses access funding that they may not be able to secure otherwise.

With so many options available, it can be challenging to understand which loan scheme is right for your business. Here we will explore some of the UK government-backed loans available and the necessary requirements.

1. Coronavirus Business Interruption Loan Scheme (CBILS)
The CBILS scheme is designed to provide financial support to businesses that have been negatively impacted by the Coronavirus pandemic. It offers loans ranging from £50,000 to £5 million with the government guaranteeing 80% of the loan value. To be eligible, businesses must be based in the UK, have a turnover of no more than £45 million, and have been adversely impacted by Coronavirus.

2. Bounce Back Loan Scheme (BBLS)
For small businesses that need quick access to funding, the BBLS scheme is an excellent option. Businesses can apply for loans of up to £50,000, which are 100% guaranteed by the UK government. To be eligible for this loan, businesses must have been established on or before 1st March 2020 and not have been in financial difficulty before that date.

3. Future Fund
This scheme is designed to help businesses that rely on equity investment to survive. To be eligible for the Future Fund, businesses must be UK-based start-ups that have previously raised at least £250,000 in equity investment. The government will contribute between £125,000 and £5 million, which must be matched by private investors.

In conclusion, understanding which UK government-backed loan is right for your business is essential. Each scheme has its own eligibility criteria, interest rates, and repayment terms. So, it’s vital to do your research and seek guidance from business advisors to select the most suitable loan option for your business.

Below are the points we will be looking at as we discuss Understanding UK Government Backed Loans

4. Start-Up Loans
The Start-Up Loans scheme provides unsecured loans of up to £25,000 to new businesses. It is designed to support entrepreneurs with viable business ideas who would not be able to secure funding through traditional means. To be eligible, businesses must be based in the UK and have been trading for less than two years.

5. Enterprise Finance Guarantee (EFG) Scheme
The EFG scheme is designed to support businesses that don’t meet the traditional lending criteria of banks. The government provides a guarantee to lenders, enabling them to approve loans to businesses that may not have sufficient security. The loan can range from £1,000 to £1.2 million, and businesses must be UK-based.

6. Innovate UK
Innovative businesses that are developing new products, processes or services can apply for funding from Innovate UK. This scheme provides grants or loans of up to £10 million to support innovation in various sectors, including agriculture, healthcare, and technology. To be eligible, businesses must be UK-based and can demonstrate the potential to transform or disrupt an industry.

Understanding UK government-backed loans is critical for businesses looking to secure funding. Each loan scheme has specific criteria, terms and conditions that businesses need to meet. It’s important to do thorough research, assess the suitability of the loan scheme and seek professional guidance before applying.

Start-Up Loans

The Start-Up Loans scheme is an ideal funding option for entrepreneurs looking to establish a new business venture. With a maximum unsecured loan amount of £25,000, the scheme aims to support small businesses that are unable to secure funding through traditional means. The loan can be repaid over a period of one to five years, and the interest rate is fixed at 6% per annum. The Start-Up Loans scheme helps new business owners in the UK to turn their ideas into a reality.

Enterprise Finance Guarantee (EFG) Scheme

Small to medium-sized enterprises (SMEs) often struggle to qualify for loans, especially when they don’t have sufficient security. The Enterprise Finance Guarantee (EFG) scheme backs up SME loans with a government guarantee, making it easier for lenders to offer credit to businesses that would otherwise be denied. With the ability to secure loans of up to £1.2 million, the EFG scheme improves access to funding for SMEs across the UK.

Innovate UK

Innovation is key to sustained economic growth, and Innovate UK is committed to supporting businesses that are developing new products, processes or services. The scheme offers a range of funding opportunities, including grants and loans, to innovative companies operating in various sectors. As a UK-based business, you can use Innovate UK’s funding to accelerate your innovative ideas and transform your industry with a maximum grant or loan of £10 million.

Business Finance Council

The Business Finance Council was established to advise on the best way SMEs across the UK can access finance. The council is made up of representatives from various sectors, including finance, government and business. It exists to ensure that SMEs are aware of the various funding options available to them and receives expert advice on how to obtain finance in a changing economic environment.

British Business Bank

The British Business Bank is a government-owned development bank that aims to improve access to finance for UK businesses. The bank helps finance providers to support SMEs by providing them with capital, guarantees, and risk-sharing arrangements. The bank works in partnership with national and regional lenders to create a diverse range of finance options for business owners.

Regional Growth Fund (RGF)

The Regional Growth Fund (RGF) was established to boost economic growth across England. The fund awards grants and loans to businesses to create jobs and grow the local economy. Through the RGF, businesses can apply for a grant or a loan of between £100k and £10m, with the amount dependent on the individual project. The RGF is helping businesses across England to grow and create jobs.

In conclusion, there are various funding options available for small businesses and entrepreneurs in the UK. The Start-Up Loans scheme can assist in the establishment of a new venture, while the Enterprise Finance Guarantee (EFG) scheme can facilitate access to loans for SMEs. Innovate UK provides funding opportunities to support the development of innovative products, processes, and services, and the Business Finance Council offers expert advice to SMEs on obtaining finance. Additionally, the British Business Bank works with financial providers to create diverse financing options, and the Regional Growth Fund (RGF) supports economic growth by awarding grants and loans to businesses in England. These funding options demonstrate the government’s commitment to providing financial support to small businesses and entrepreneurs to drive economic growth in the UK.

Helpful resources to get you going in the right direction with your own business:

Use the Business Plan Builder Tool to develop your own business plan. And use the Funding Database to find all government funding options for your small business.