OIC establishes coronavirus business loan scheme

Orkney Islands Council has established a loan scheme to assist local businesses experiencing cashflow difficulties as a result of the coronavirus pandemic.

The Coronavirus Pandemic Emergency Loan Scheme is to offer secured loans of between £50,000 and £100,000.

The loans will be drawn from the council’s recently set up £5m Coronavirus Response Fund, which was established at a special meeting of the Full Council on April 16 in response to the current crisis.

This fund has been created using £576,000 in Crown Estate revenue funding, £1,424,000 from the the Renewable, Redevelopment and Regeneration Fund  and £3,000,000 from the Strategic Reserve Fund.

The grant and loans schemes have been established following engagement with business representatives. The council was asked to establish a means to ease the immediate pressure from poor cash flow and the consequent risk of business failure across Orkney, with the impacts of the pandemic completely curtailing all trade in some sectors and severely limited trade in others.

This fund is intended to supplement rather than replace national schemes. The businesses who would apply will need to show that they have taken all possible steps to reduce unnecessary expenditure and have explored all forms of government support.

Businesses will also need to demonstrate that they have applied to the national Coronavirus Business Interruption Loan and Coronavirus Bounce Back Loan schemes before seeking a loan from the council.

The council says the loan repayment term for their loan scheme will be set following an assessment of the business model and the applicant’s ability to service the loan facility. Standard loan terms would be for a duration of up to six years, with an initial repayment holiday period of up to one year, followed by up to five years to repay the loan balance in full. Exceptionally, requests for a loan period of up to ten years may also be considered.

Councillor Graham Sinclair is chairman of the council’s Development and Infrastructure Committee. He said: “This is a very concerning and uncertain time for businesses, particularly in Orkney as head into what would have been another tourist season.

“There is a great deal of support out there for businesses, but we know that not all of the existing schemes will help all businesses. The newly established loan fund offers a further option for businesses who have been unable to secure support elsewhere.

“I would encourage businesses to consider this as an option – and ensure that as many local businesses as possible survive this crisis as we look to rebuild our economy during the recovery phase.”