COVID-19: Financial Support

COVID-19: Financial Support

The government has announced a range of financial support schemes for businesses.

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On the 24th September the Chancellor announced that applications for the government’s coronavirus loan schemes that are helping over a million businesses will be extended until the end of November. (Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund.)

Bounce Back Loans

A new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders.

  • Businesses can borrow between £2,000 and £50,000 and access the cash within days.
  • The loans are  interest free for the first 12 months, and businesses can apply online through a short and simple form.
  • The government will provide lenders with a 100% guarantee for the loan and pay any fees and interest for the first 12 months.
  • Able to access these loans through a network of accredited lenders.

It was announced on the 24th September that businesses who took out a Bounce Back Loan could pay through a new Pay as You Grow flexible repayment system, this includes extending the length of the loan from six years to ten, which will cut monthly repayments by nearly half, as well as  interest-only periods of up to six months and payment holidays will also be available to businesses. 

Businesses should check the British Business Bank website to find out which lenders provide Bounce Back Loans. Businesses will be required to fill in a short online application form on their lender’s website, which self-certifies whether they are eligible for a Bounce Back Loan facility. FAQs about Bounce Back Loans can be found here.

If you would like support in understanding the Bounce Back funding  please contact us.

Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses, with an annual turnover of up to £45m, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years.

You should apply via your lender’s website or through one of the accredited finance providers offering the scheme (and not the British Business Bank).

If you would like support in understanding the Coronavirus Business Interruption Loan Scheme please contact us.

The scheme is delivered through commercial lenders, backed by the Government-owned British Business Bank.

  • The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility.
  • There is no guarantee fee for SMEs to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees
  • Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000.
  • For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:-they exclude the Principal Private Residence (PPR), and
    -recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

The full rules of the scheme and the list of accredited lenders is available on the British Business Bank website.

Coronavirus Large Business Interruption Loan Scheme

The Coronavirus Large Business Interruption Loan Scheme (CLBILS)  provides access to finance for medium-sized and larger businesses affected by the coronavirus outbreak.

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides financial support to mid-sized and larger UK businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

It facilitates access to finance for businesses with a turnover above £45 million.

CLBILS is available through a range of British Business Bank accredited lenders and partners, the maximum amount available through CLBILS to a borrower is £200m. Term loans and revolving credit facilities over £50m will be offered by CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance and asset finance facilities remains at £50m. Companies borrowing more than £50m through CLBILS will be subject to further restrictions on dividend payments, senior pay and share buy-backs during the period of the loan.

For information on how to apply click here

If you would like support in understanding the Coronavirus Large Business Interruption Loan Scheme please contact us.

A lender can provide:

  • up to £25 million to businesses with turnover from £45 million up to £250 million
  • up to £50 million to businesses for those with a turnover of over £250 million

Finance is available in the form of:

  • term loans
  • revolving credit facilities (including overdrafts)
  • invoice finance
  • asset finance

Covid-19 Corporate Financing Facility

The new Covid-19 Corporate Financing Facility (CCFF) means that the Bank of England will buy short-term debt from larger companies. This will support companies which are fundamentally strong, but have been affected by a short-term funding squeeze. It will also support corporate finance markets overall and ease the supply of credit to all firms. The scheme will be funded by central bank reserves – in line with other Bank of England market operations. It will operate for at least 12 months, and for as long as steps are needed to relieve cash flow pressures on firms that make a material contribution to the UK economy.

Companies – and their finance subsidiaries – that make a material contribution to the UK economy are able to participate in the facility. More information on eligibility can be found on the Bank of England website.

In order to access the CCFF, you will need to contact your bank. It is important to note that not all banks issue commercial paper. If your bank does not issue commercial paper, UK Finance will provide a list of banks that are able to assist. More information can be found on the Bank of England website.

If you would like support in understanding the Corporate Financing Facility  please contact us.

Future Fund

How it works:

  • Scheme operates on a commercial basis to deliver an initial commitment of £250m of new government funding.
  • Financing will be unlocked by additional third-party investment on a match funded basis.
  • Applications submitted via an online platform based on a set of standard terms and eligibility criteria.

The Future Fund provides government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

The Future Fund is being expanded to accommodate businesses that contribute significantly to the UK economy, but do not have their parent company based in the UK because they participated in a non-UK based accelerator programme.  These changes to eligibility will allow a wider number of suitable companies to apply, while maintaining scheme protections against fraud and abuse and ensuring that the Future Fund continues to support economic activity in the UK.

A factsheet on the Future Fund can be found here.

If you would like support in understanding the Future Fund and Innovate UK funding  please contact us.

Sustainable Innovation Fund

The Sustainable Innovation Fund  helps companies recovering from the impact of coronavirus (COVID-19) keep their cutting-edge projects and ideas alive.

The fund is almost £200 million and is designed to help businesses across the UK drive forward cutting-edge new tech and recover from the impacts of coronavirus.

The government’s Sustainable Innovation Fund is open to companies across all parts of the UK who need urgent financial support to keep their cutting-edge projects and ideas alive.

  • UK registered businesses can apply for a share of up to £55 million for new projects focusing on sustainable economic recovery from COVID-19. Find out more here
  • Organisations can apply for a share of up to £10 million, including VAT, to help UK businesses and the public sector recover from COVID 19 in a sustainable manner. Find out more here

If you would like support in understanding the Sustainable Innovation Fund and Innovate UK funding  please contact us.

Other initiatives

Other initiatives announced by government to support businesses financially are:

  • The Coronavirus Act will extend the time period for suspension of the forfeiture of evictions from June 30 to September 30, meaning no business will be forced out of their premises if they a miss a payment in the next three months
  • Secondary legislation to prevent landlords using Commercial Rent Arrears Recovery unless they are owed 189 days of unpaid rent. The time period for which this measure is in force will be extended from June 30 to September 30.
  • If your accounts will be late because your company is affected by COVID-19, and your filing deadline has not yet passed, you can apply here for an automatic and immediate 3 month extension to file your accounts.
  • Businesses who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller installments. Rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
  • A temporary 15% VAT cut for the tourism and hospitality sectors will last until the end of March next year