Government measures in key jurisdictions 5th edition - Flipbook - Page 154
United Kingdom
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With the exception of BBLS and FF, these schemes ensure that businesses that were viable
prior to the outbreak of Covid-19 will have access to funding. Those businesses who were
facing financial difficulty prior to the outbreak, will find it more difficult to get access to
this funding.
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For more information, see our articles Covid-19 Government help for UK
businesses and Covid-19 Government funding for UK businesses update – further
help for smaller UK businesses
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A further £750 million will also be available as loans and grants for small businesses
focusing on research and development. This support will be available through Innovate
UK’s grants and loan scheme.
UPDATES:
• Following calls for extensions to each of CBILS, CLBILS, BBLS and the FF (together, the
Schemes), in September 2020, as part of the Government’s Winter Economy Plan, the
Chancellor of the Exchequer announced the extension of the Schemes to 30 November
2020 (Extension 1). This was in response to the likelihood of a second national lockdown
being announced in November 2020 due to a second wave of Covid-19 becoming a
reality. Those tougher lockdown restrictions would put more UK businesses under
pressure without being able to access additional funding to stay afloat.
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Some of the main changes to the Schemes under Extension 1 are summarised as follows:
(i) initially loans under CBILS were for a maximum term of six years, but lenders are now
allowed to extend the term to up to ten years. This will reduce the required monthly
repayments business would need to make after the first twelve months; (ii) CBILS and
CLBILS will also benefit from more flexibility on the date of the test of whether or not their
business is an “undertaking in difficulty” is assessed. In order to be eligible for this
scheme, businesses previously had to demonstrate that they were not an “undertaking in
difficulty”, a requirement under EU State Aid Law, as of 31 December 2019. The new
guidance allows for this assessment to now be determined as at the date of application for
CBILS/CLBILS. This flexibility means that businesses can take action to convert their debt
to equity in order to qualify for CBILS/CLBILS, giving them the option to restructure their
finances before applying in order to become eligible; and (iii) in order to offer greater
flexibility, businesses which borrowed under BBLS now have new options to: (a) repay
their loans over a period of up to ten years; (b) move temporarily to interest-only payments
(no repayment of principal) for six months which businesses will be able to do three times
during the term of the loan; or (c) request a full six-month payment holiday for both
interest and principle once over the term of the loan, but this is only after the business has
made six repayments.
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In order to help keep businesses affected by Covid-19 afloat during the second national
lockdown (which commenced on 5 November 2020), the Chancellor announced on 2
November 2020, that the Government would further extend the Schemes to the end of
January 2021 (Extension 2). Extension 2 was granted in order to give businesses two extra
months from to make loan applications (from 30 November 2020 as above).
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The main changes under Extension 2 affected BBLS in that businesses which received
loans via BBLS will now be able to top-up existing loans if they need extra/additional cash.
This top-up will help businesses who have borrowed less than the maximum sum available
(up to 25% of their turnover up to a maximum of £50,000) in order to avoid them having
to take on extra debt. As of 10 November 2020, businesses can request top-ups from their
existing BBLS lender, but they are only allowed to do so once.
Government measures in key jurisdictions
