Coronavirus: Information for small businesses that are customers of financial services firms

Information on this page was last updated in 2021.

We know this is a difficult time for small and medium-sized enterprises (SMEs) across the UK. We get questions from business owners and other stakeholders about the impact of coronavirus, particularly about accessing finance and business interruption (BI) insurance as restrictions lift.

On 6 April 2021, the British Business Bank launched the Recovery Loan Scheme (RLS)[1] to provide financial support to businesses across the UK as they recover and grow. 

The Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS), which were set up to help businesses access finance during the crisis, closed to new applicants on 31 March 2021.

While we aren’t responsible for these schemes, we are working with the Government to make sure that borrowers under the schemes are treated fairly. 

On 15 April 2020, we wrote to the CEOs of banks [2]and insurers[3] (PDF), setting out our expectations in relation to lending to and insuring small businesses during the pandemic.

Since then, we have updated our statement on the CBILS and the BBLS[4] and took a case to the Supreme Court to resolve contractual uncertainty in BI insurance cover. 

Find out more about: 

• the Recovery Loan Scheme (RLS)
• the Bounce Back Loan Scheme (BBLS)
• the Coronavirus Business Interruption Loan Scheme (CBILS)
• the steps to take if you think you've been treated unfairly
• business interruption insurance cover
• our role as the regulator in terms of SME lending
• standards of lending practice for business customers

Government business loan schemes

Through the British Business Bank, the Government established a number of loan schemes to help businesses access finance during the pandemic and to help them recover and grow. 

The main schemes, the BBLS and the CBILS, have closed to new applicants. But businesses in need of financial support to help them recover can access the RLS.

In addition to the RLS, BBLS and CBILS, the Government set up the Coronavirus Large Business Interruption Loans Scheme (CLBILS). This scheme supports large businesses with an annual turnover of over £45 million. It also closed to new applicants on 31 March 2021. 

In all these schemes, the Government gives the lender a partial or full guarantee against the outstanding balance of the facility. However, you should be aware that the borrower remains fully liable for the debt.

You can find more information on other support for small businesses on the Government website[5].

Recovery Loan Scheme (RLS)

This scheme opened on 6 April 2021. If you have borrowed under the other Government schemes you are also eligible to access this scheme.

For more details and to find out how to apply you can visit the British Business Bank website or contact a lender directly. 

Bounce Back Loan Scheme (BBLS)

This scheme is closed to new applicants. The scheme helped SMEs to borrow between £2,000 and up to 25% of their turnover. The maximum loan available was £50,000. 

The Government guarantees 100% of the loan and pays the interest for the first 12 months. After 12 months, borrowers will pay the interest rate of 2.5% a year. The borrower does not have to make any repayments for the first 12 months. 

Coronavirus Business Interruption Loan Scheme (CBILS) 

This scheme is closed to new applicants. The scheme helped small and medium-sized businesses to access loans and other kinds of finance up to £5 million.

The Government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months.

Steps to take if you think you've been treated unfairly

On 1 April 2019, we expanded the remit of the Financial Ombudsman Service.

Now, SMEs with up to £6.5m annual turnover, and either an annual balance sheet below £5m, or fewer than 50 employees, are eligible to complain to it. This covers around 97% of SMEs in the UK.

In May 2020, we published an exchange of letters between us[6] and the ombudsman service[7] (PDF) that set out how the ombudsman service will approach complaints that might arise from lending under the BBLS and CBILS.

How to complain

If you think you've been treated unfairly and want to complain, you should first contact your financial services provider and give them a chance to put the situation right.

If you're unhappy with their response, the Financial Ombudsman Service for small businesses[8] may be able to investigate. The service is free, impartial, and has the power to make legally binding decisions.

For complaints about acts or omissions by firms on or after 1 April 2019, the ombudsman service can award compensation of up to £355,000.

You may also be able to use the Business Banking Resolution Service (BBRS)[9], which launched on 15 February 2021. It’s an industry-funded, free and independent service that resolves disputes between larger SMEs and 7 participating banks.

Find out more about how to complain if you’re a small business[10].

Business interruption insurance cover

The coronavirus pandemic has led to widespread disruption and business closures, resulting in substantial financial loss.

There had been considerable concern about the lack of clarity and certainty for some customers making business interruption (BI) insurance claims, and the basis on which some firms are making decisions on claims.  

We therefore sought clarification from the High Court as part of a test case aimed at resolving the contractual uncertainty around the validity of many BI claims. The High Court’s decision on the test case was subject to a leapfrog appeal to the Supreme Court.

The Supreme Court handed down its judgment on 15 January 2021, substantially allowing our appeals. This means that many thousands of policyholders who have cover should now have their claims for coronavirus-related BI losses paid.

Find out more on our dedicated BI insurance page[11].

Our role as the regulator

We create and enforce rules that protect consumers, make sure markets work well and promote competition.

We do not adjudicate on individual complaints. That is the role of the ombudsman service. However, we do work closely with the ombudsman service, and the information it gives us helps us identify wider issues.

Most business lending is unregulated, but business lending of £25k or less to certain types of businesses, such as sole traders, is generally regulated.

Most of our rules don’t apply to unregulated business lending and our ability to intervene is limited, even if the firm is authorised by us. The activities that are regulated, and those which are not, are set out in legislation by Parliament. This is one of the reasons why we expanded the remit of the ombudsman service to include 97% of small businesses.

Since the financial crisis of 2008, we have also introduced a new regime to better hold Senior Managers directly to account for their conduct, including in relation to unregulated activities the firm is undertaking.

To make BBLS funds quickly accessible to more businesses, the Government legislated to remove many of the regulatory obligations that lenders would normally have to comply with. This means that a lot of the protections that would normally apply to regulated loans do not apply to BBLS. For more information, you may want to speak to the lender or seek professional advice.

Debt collecting by a lender under the BBLS will be a regulated activity, where the lending would have been regulated before this legislation, and the scope of regulated debt collecting by third parties remains unchanged. This means that our rules on debt collecting activities will apply in these areas and we can take action if we see a failure to comply with them.

For regulated lending under CBILS, we have also said that we do not expect firms to have to comply with most of our creditworthiness rules where they comply with the relevant requirements of the scheme[4].

Please also see our statement on the RLS[1].

Standards of lending practice for business customers

For lending to business customers there is a set of industry standards[12] overseen by the Lending Standards Board (LSB). The standards apply where a firm is lending to business customers with turnover of up to £25 million per year. The LSB oversees lenders’ adherence to the code. The standards cover both regulated and unregulated lending.

Industry standards help us determine if a Senior Manager is discharging their duties appropriately. This includes considering a Senior Manager’s conduct on unregulated lending and unregulated debt collecting. We recognised these standards on 11 February 2020 in respect of unregulated lending and unregulated debt collecting.

On 5 August 2020, we maintained our recognition of a revised version, which was altered as result of the coronavirus pandemic. The standards now make specific reference to changes that have been made as a result of the BBLS and CBILS.

Read more about our recognition of these standards[13].