The government’s Coronavirus Business Interruption Loan Scheme (BIL) went live on 23 March 2020 and is intended to support SMEs by providing access to loans, overdrafts, invoice and asset finance which they cannot otherwise obtain, of up to £5m and for up to 6 years.
The government will pay the first 12 months interest and the upfront arrangement fees as well as guaranteeing 80% of the loan to the lender, but it has been widely reported that some lenders are also seeking additional security from the owners or directors of SMEs in the form of personal guarantees.
Following discontent and adverse publicity, some lenders are back tracking on the requirement for personal guarantees, and it is understood that the government is being urged to ask or encourage banks to remove this requirement, but some of the 40 lenders eligible to provide these loans may still insist they are provided as additional security for the loans.
If you are asked to provide your personal guarantee to any funder, whether it be for a BIL or other form of financing, you should take legal advice before you sign the document so you are certain of the obligations and liabilities you will have.
We are able to assist you by providing you with the advice you will need to make an informed decision and so you fully understand what your liability to the funder will be.
If your lender requires you to take independent legal advice before or at the time you sign the personal guarantee, we are able to arrange ‘virtual’ meetings with you, by Microsoft Teams or Skype, to fulfil your funders requirements. For more information or to arrange an appointment with our commercial solicitors please call us on 0161 696 6229 or complete our online enquiry form and a member of the team will contact you directly.