Below we have attempted to illustrate the key elements of the different finance available following the COVID-19 pandemic.
The Bounce Back Loan Scheme (BBLS)
Summary
- The BBLS is to support small and medium-sized businesses
- Allows them to borrow between £2,000 and up to 25% of turnover
- the maximum loan available is £50,000
- The government will guarantee 100%
- No fees or interest for the first 12 months and thereafter the interest will be fixed at 2.5% per year
Eligibility
Businesses must be:
- Based in the UK
- Established before 1 March 2020
- Adversely impacted by coronavirus
- If your business was classed as a business in difficulty on 31 December 2019 you’ll need to confirm that you’re complying with additional state aid restrictions (further links and explanation are on the gov.uk link below)
Who can’t apply
- Banks, insurers and reinsurers (but not insurance brokers)
- Public sector bodies
- State funded primary and secondary schools
- If you have already claimed under CBILS, CLBILS or Covid-19 Corporate Financing Facility (though if you have received funding under one of the other schemes you may be able to apply for a BBLS to pay off the other borrowing, i.e. transfer into the BBLS)
How long is the loan for?
The loans is for 6 years but can be repaid earlier without paying a fee. No repayment is due during the first 12 months.
Will I need to give a personal guarantees?
- No personal guarantee
Will the lender need to obtain security?
- No recovery action can be taken over a borrower’s main home or primary personal vehicle.
- For sole traders or partnerships, who do not have the benefit of limited liability, other personal assets may be at risk of recovery action.
The full government guide can be found by following the link, there is also a useful tool to assist you in establishing what may be available to your business:
https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
Coronavirus Business Interruption Loan Scheme (CBILS)
Summary
- The scheme is set up to help small and medium sized businesses
- Allows borrowing of up to £5 million
- Government guarantees up to 80% of the finance
- No interest payable by the business for the first 12 months, thereafter the interest will be payable at a rate set by the lender, this may be fixed or variable depending what you agreed
Eligibility
Businesses must be:
- Based in the UK
- Have an annual turnover of up to £45 million
- Viable if it were not for the pandemic
- Have been adversely impacted by coronavirus
- Should you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019 (further links and explanation are on the gov.uk link below)
Who can’t apply
- Banks, insurers and reinsurers (but not insurance brokers)
- Public sector bodies
- State funded primary and secondary schools
How long is the loan for?
This depends on the type of finance you apply for
- Up to 3 years for overdrafts and invoice finance facilities
- Up to 6 years for loans and asset finance facilities
Will I need to give a personal guarantees?
- No requirement to personally guarantee loans up to £250k
- Loans over £250k may require a personal guarantee, but the amount the guarantee will be required for will be limited to 20% of outstanding loan after recoveries from business and any other security
Will the lender need to obtain security?
- This is down to the lender and may be required for some borrowers particularly where security is unavailable
The full government guide can be found by following the link, there is also a useful tool to assist you in establishing what may be available to your business:
https://www.gov.uk/guidance/apply-for-the-coronavirus-business-interruption-loan-scheme
Accredited lenders for the BBLS and CBILS I have attached a link here.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
Summary
- The CLBILS scheme is to help medium and large sized businesses
- Borrowing can be up to £200 million
- Government guarantees 80% of the finance to the lender
- The lending can be a
- Loan
- Revolving credit facility (including overdraft)
- Invoice finance
- Asset finance
- Lender can provide up to 25% of the business’s annual turnover (to £200 million)
Eligibility
Businesses must be:
- Based in the UK
- Have a turnover of over £45 million
- Has not received support under the Bank of England’s Covid -19 Corporate Financing Facility (CCFF) (see below)
- Adversely impacted by coronavirus
- Able to show that they can trade out of any short-term to medium-term difficulty resulting from coronavirus
Who can’t apply
- Banks, insurers and reinsurers (but not insurance brokers)
- Public sector bodies
- State funded primary and secondary schools
- Building societies
- If you have received support under the Bank of England’s Covid -19 Corporate Financing Facility (CCFF) (see below)
How long is the loan for?
The finance is available for 3 months to 3 years
The full government guide can be found by following the link, there is also a useful tool to assist you in establishing what may be available to your business:
https://www.gov.uk/guidance/apply-for-the-coronavirus-large-business-interruption-loan-scheme
COVID-19 Corporate Financing Facility (CCFF)
This scheme helps large businesses affected by Covid-19 and is designed to purchase their short-term debt.
This scheme is a little different in that it is run by the Bank of England. Further information can be found on the links below.
Summary and Eligibility
The Company must
- Make a material UK contribution
- Be investment grade rated (or equivalent) as at 1 March 2020 (as supplemented by the ongoing credit quality review described below)
- Not be PRA- or FCA-regulated
- Not be a public undertaking
- Not be a leveraged investment vehicle
- (NB: there is additional guidance for some specific types of entities – please see below for more details).
- There is no requirement to have previously issued Commercial Paper (CP).
The full government guide can be found by following the link, there is also a useful tool to assist you in establishing what may be available to your business:
https://www.gov.uk/guidance/apply-for-the-covid-19-corporate-financing-facility
Additionally, the Bank of England guidance can be found here.
Some other useful links surrounding loan schemes that are available:
