How to find
a government business loan

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How to find
a government business loan

Coronavirus: Financial support for businesses

Coronavirus Business Interruption Loan Schemes

Learn more about the Coronavirus Business Interruption Loan SchemesLink opens in a new window, managed by the British Business Bank, available during the coronavirus outbreak.

Other financial support

Find information on other coronavirus-related financial support.

Coronavirus guidance and advice

Read up-to-date guidanceLink opens in a new window on coronavirus and how it affects your business.

Finding a business loan that suits your business can be complicated because of the number of options available in the market.

Whether you’re looking for finance to grow your business or money to get your business started, there are lots of different providers you can approach.

But things aren’t necessarily straightforward when you find a provider you like the look of, because your application can still be rejected.

Why was my business loan application rejected?

There are lots of reasons why a lender might reject your application. We explain some of the most common ones below:

Your credit score

When you apply for a loan, lenders will likely consider both your business credit score and personal credit score. These provide a good indication of how risky it would be to lend money to you or your business.

The age of your business

New businesses can sometimes struggle to apply for loans because they have little or no evidence of their ability to pay off debt. Some providers require a business to be trading for two years to be eligible for a business loan.

You already have debt or lines of credit

If you already have a number of debt and credit facilities, lenders may be reluctant to add to it as it could affect your ability to repay the loan.

Your sector

Lenders view certain sectors as high-risk and might be reluctant to provide finance to businesses operating within them.

Lack of security

Some business loans require security in the form of assets or personal guarantees. A business that doesn’t have assets of sufficient value or can’t provide a personal guarantee may be refused finance.

Your application isn’t well thought out

Lenders may ask to see your business plan and want to know how you’ll use the loan. If these don’t make sense, or seem incompatible, a lender will likely reject your application.

The above reasons may frustrate you, especially if you’re a relatively young business without a long track record. But the good news is that there are several government-backed lenders and schemes that can help if your business loan application is rejected.

Coronavirus Business Interruption Loan Schemes

The Coronavirus Business Interruption Loan Schemes, managed by the British Business Bank, support businesses across the UK that are losing revenue and seeing their cashflow disrupted as a result of the COVID-19 outbreak.

The following schemes are currently available until 31 March 2021:

1. Bounce Back Loan Scheme (BBLS)

  • For SMEs, micro businesses and other businesses requiring smaller loans
  • Looking for between £2,000 and £50,000
  • Term loan repaid over six years
  • No set-up fees and first 12 months of interest payments covered by government
  • No repayments during the first 12 months
  • New Pay As You Grow options to support Bounce Back Loan borrowers to manage their cashflow

2. Coronavirus Business Interruption Loan Scheme (CBILS)

  • For smaller businesses with a turnover of less than £45 million
  • Looking for up to £5 million in finance
  • Business loans, overdrafts, invoice finance and asset finance available
  • First 12 months of interest and lender-levied fees covered
  • More than 50 accredited lenders

3. Coronavirus Large Business Interruption Loan Scheme (CLBILS)

  • For larger businesses with a turnover of more than £45 million
  • Looking for up to £200 million in finance
  • Business loans, overdrafts, invoice finance and asset finance available
  • Repayment terms of up to three years

The Bank Referral Scheme

Launched in 2016, the Bank Referral Scheme helps businesses to find alternative funding when one of the major UK banks has rejected them for finance.

You must agree to your details being shared. If you do, the scheme passes details of your business to the following three designated platforms:

  • Alternative Business Funding
  • Funding Options
  • Funding Xchange

Once the application is referred, the platforms will review the information and offer you funding if they find a suitable match.

Lenders have different appetites to risk. Just because one isn’t willing to lend doesn’t mean they will all take the same approach.

National and regional funds

There are a number of government-backed funds in the UK, designed to support smaller businesses in accessing finance.

The national funds or programmes are available to smaller businesses across the country. The regional funds, as you’d expect, are available to smaller businesses within the relevant regions.

British Business Bank regional programmes

The British Business Bank works alongside Local Enterprise Partnerships (LEPs) in the North of England, the Midlands and the Cornwall and Isles of Scilly to deliver three regional development programmes:

Each scheme is designed to help smaller businesses within the relevant regions access different forms of finance, including debt financeLink opens in a new window and equity financeLink opens in a new window.

UK Export Finance (UKEF)

UK Export Finance (UKEF) does not lend directly to businesses. Instead, through its Export Working Capital Scheme, it supports businesses that have been unable to secure finance to export their product or goods.

UKEF provides guarantees to lenders to reduce their risk and increase their appetite to lending.

Start Up Loans

Start Up LoansLink opens in a new window is a government-backed scheme designed to help individuals start or grow a business.

The loans are:

  • unsecured — so you don’t need to use any assets as security or provide a personal guarantor
  • personal loans — which means you’re personally liable for repaying the amount you’ve borrowed