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

Information on the Government support available during the coronavirus (Covid-19) pandemic and what to do if you think your small business has been treated unfairly.

We know this is a very difficult time for SMEs across the UK. We are getting a lot of inquiries from business owners and other stakeholders about the impact of the coronavirus, particularly about accessing finance and business interruption insurance.

The Government has launched the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) to help businesses access finance during the crisis.

While the FCA is not responsible for the schemes, we are committed to ensuring that the benefits of these measures are passed to the businesses that need them as soon as possible.

On 15 April, we wrote to the CEOs of banks and insurers (PDF), setting out our expectations in relation to lending to small businesses and insuring small businesses during this crisis.

Since then, we have updated our statement on the CBILS and the BBLS and announced that we intend to obtain a court declaration to resolve contractual uncertainty in business interruption (BI) insurance cover. 

Find out more about: 

Government business loan schemes

Through the British Business Bank, the Government has established the Bounce Back Loan Scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS) to help businesses access finance during the crisis. Numerous commercial lenders are accredited and are able to offer the schemes. 

In addition to the BBLS and CBILS, the Government has also set up the Coronavirus Large Business Interruption Loans Scheme (CLBILS). This scheme supports large businesses, with an annual turnover of over £45 million.  

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 which businesses are eligible, as well as details of other support for small businesses, on the Government website.

Bounce Back Loan Scheme (BBLS)

The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £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) 

The scheme helps 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 as a small business if you think you have been unfairly treated

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.

We recently published an exchange of letters between the FCA and the Financial Ombudsman Service (PDF) that sets out how the Ombudsman Service will approach complaints that might arise from lending under the Government’s schemes.

How to complain

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

We have asked  firms to prioritise handling complaints from micro-enterprises and small businesses who are likely to face serious financial difficulties if their complaint is not resolved promptly and fairly during the coronavirus situation.  

If you are not happy with their response, the Financial Ombudsman Service for small businesses 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 Financial Ombudsman Service can award compensation of up to £355,000.

Business interruption insurance cover

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

Many customers have made claims for these losses under their Business Interruption (BI) insurance policies.

There has been widespread concern about the lack of clarity and certainty for some customers making these claims, and the basis on which some firms are making decisions on claims.

Find out how we are seeking legal clarity on BI insurance during the coronavirus crisis. 

Role of the FCA

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

We do not adjudicate on individual complaints. That is the role of the Financial 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 FCA 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 Financial 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 scheme funds quickly accessible to more businesses, the Government has 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 on this you may like to speak to the lender or seek professional advice.

Debt collecting by a lender under the scheme 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.

Standards of lending practice for business customers

For lending to business customers there is a set of industry standards overseen by the Lending Standards Board (LSB). The standards apply where a firm is lending to business customers with turnover 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 that 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 Covid-19 pandemic. The standards now make specific reference to changes that have been made as a result of the Bounce Back Loan and Coronavirus Business Interruption Loan schemes.  

Read more about our recognition of these standards.

Page updates

05/08/2020: Information added Standards of lending practice for business customers

20/07/2020: Information changed Misspelling corrected