Government measures in key jurisdictions 5th edition - Flipbook - Page 155
United Kingdom
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On 17 December 2020, the Chancellor announced a further extension of CBILS,
CLBILS and BBLS until 31 March 2021 (Extension 3) meaning more businesses would
have more time to benefit from the scheme and access the finance they need. This
support was vital due to the economic impact of the tier system and the imposition of
the third national lockdown in January 2021 leaving many businesses having to face
the first few months of the new year with reduced or no revenue.
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As the Government did not announce an extension to the FF, this scheme closed for
new applications on 31 January 2021. The FF is still processing applications submitted
prior to its closure.
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As Extension 3 was announced prior to the Budget (which will take place on 3 March
2021), it is expected that details of a new UK state-guaranteed successor loan scheme
to SMEs (to replace the Schemes) will be provided by the Chancellor at the Budget.
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On 8 February 2021, the Government announced further details of the Pay as You
Grow (PAYG) repayment system, which is designed to provide flexibility for businesses
repaying a loan under BBLS. This announcement confirms that businesses will be able
to pause repayments entirely for up to six months. Previously, the repayment holiday
was only expected to be available after six monthly repayments had first been made.
As announced previously at Extension 1 (see above), PAYG will, in addition, still give
businesses the option to (i) extend the length of the loan from six to ten years; and (ii)
make interest-only payments for six months (on up to three occasions). Businesses can
take advantage of these repayment options individually, or in combination with each
other, however businesses will pay more interest overall if they use one or more of
these options, and the length of the loan will increase in line with any repayment
holidays taken. Businesses should wait until they are contacted by their BBLS lender
about PAYG options, and these lenders should be in touch three months before
repayments commence. Businesses first began to receive loans under BBLS in May
2020, and the first repayments (subject to any repayment holidays) are due from May
2021 onwards.
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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 Covid-19 – Government help for UK Businesses, Covid-19
Government funding for UK businesses update – further help for smaller UK
businesses, Every good business deserves a (Government) favour – the recent
extensions of the Government’s Loan Guarantee Schemes and Further extensions to
Government lending schemes – an early Christmas present for SMEs.
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A further £750 million will also be available as loans and grants for small businesses
focussing on research and development. This support will be available through
Innovate UK’s grants and loan scheme.
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