Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, what arrangements are in place in the event that a claim is made against a Government guarantee for a coronavirus business loan that has been used to repay existing loans.

The arrangements in place for a claim made against a Government Guarantee for a Coronavirus Business Loan are the same whatever the purpose of the loan.

Borrowers remain liable for the outstanding debt. Lenders are required to pursue borrowers for repayment of all outstanding debt, in accordance with their normal processes for the recovery of a loan. Provided the facility was eligible when it was offered, claims on the guarantee can be made within a reasonable time period following the lender making a Formal Demand to the borrower.

Once a claim has been made, the lender is still obliged to seek further potential recoveries if the process has not been completed. Lenders should apply their normal commercial judgement to decide when it is appropriate to cease recovery activity. If a recovery is made after the settlement of the Guarantee Claim, lenders should refund the British Business Bank in respect of the Guarantee Claim they received.