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COVID-19 support from High Street Banks for business customers

Affected by Covid-19? Immediate Rescue Or Closure Options Available

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Updated: 30th March 2020

As businesses bear the economic pressure posed by the coronavirus outbreak, leading High Street Banks have announced a string of measures to protect both personal and business banking customers.  The ongoing pandemic which has forced the hands of businesses to enforce furlough leave and mass lay-offs as a result of declining sales due to social distancing has led to the introduction of emergency business support.

As a result of COVID-19, several financial rights have been enforced to soothe the wound either caused or worsened by the virus, halting the speed or putting a stop to the deteriorating financial state of businesses across the country, as even international markets suffer the blow. Here are the measures introduced by banking providers, many of which are universal:

Mortgage holidays – Chancellor of the Exchequer, Rishi Sunak, announced that banking providers are required to comply with providing a three month mortgage holiday to individuals and businesses struggling to keep up with payments as a result of the coronavirus outbreak. Many major lenders have announced repayment holidays; however, all lenders are now required to comply with the measure following the announcement made by the Chancellor.

The repayment terms may vary for each bank, so it’s vital to check the fine print before taking advantage of the mortgage holiday. It may be standard practise for some banking providers to tag the three months to the end of your current mortgage term or as an alternative, increase your monthly mortgage payments. This is typically at no risk to your credit rating and shouldn’t affect your right to request a mortgage holiday in the future following the coronavirus pandemic.

Overdrafts: Many banking providers are providing interest-free overdraft buffers, equivalent to the weekly National Living Wage, for three months, waiving any interest incurred during this period. This agreed overdraft limit is due to come into force in early April and automatically applies to the majority of accounts, for which you should receive communication in due course. In some cases, the Bank may be able to increase your overdraft limit if required.

Credit cards: High Street Banks are removing late payment fees on credit cards for an initial period of three months. In some cases, you may also be eligible for an increased credit card limit, allowing you to borrow more money during this uncertain time to ease cash flow.

Savings access: If you require access to your savings from the likes of ISAs and fixed-rate bonds, you may be able to do so free of charge.

Contactless limit – To comply with social distancing rules and to reduce physical contact through the handling of cash transactions, the contactless limit is set to be raised from £20 to £45 from April 1.

Coronavirus Business Interruption Scheme (CBILs) – In conjunction with the British Business Bank, selected High Street Banks are participating in the Business Interruption Scheme to make finance more accessible for small businesses in need of emergency funding as a result of coronavirus. This scheme is intended to support companies who are losing revenue as a result of COVID-19, for which a lender can provide finance up to £5 million in the following form:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

The Big Four banks; Barclays, HSBC, Lloyds and Royal Bank of Scotland, have agreed to exclude personal guarantees as security in lending agreements under £250,000.

Many banking providers have established online processes to allow you to request the above support, including payment breaks from additional loan facilities, such as trade finance and working capital. In addition to business support from the High Street, HMRC has extended the goalposts for accessing a Time to Pay arrangement, granting further relief to coronavirus hit businesses in financial distress.

Jonathan Munnery

Partner

0800 644 6080
Director Support - Business suffering from Cash-Flow Problems?
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