A number of the loans and finance schemes introduced by the Government were due to a close at the end of the Autumn. In response to the November lockdown these dates have now been extended to 31 January 2021. Here you'll find an overview of the loans and dates to have on your radar.
Updated 3 November 2020
Background
Introduced to help organisations weather the economic turbulence from Covid-19, the Government’s various business loans schemes have been in high demand.
Figures from HM Treasury on 18 August showed:
- The Coronavirus Business Interruption Loan Scheme had approved 60,409 applications to a value of £13.68bn (this was out of a total of 122,885 applications)
- The Coronavirus Large Business Interruption Loan Scheme had approved 516 out of 938applications. The value of loans approved stood at £3.50bn
- Business Bounce Back loans had been awarded to 1,174,854 successful applications (out of a total of 1,430,017) and reflected a sum of £35.47bn
- The Future Fund had approved 590 convertible loans (out of a total of 902 applications). The value of the approved loans came to £588.3m
Drawing to a close on 31 January 2021
In response to the November lockdown, the Chancellor announced that the Government’s three Coronavirus business interruption loan schemes and the Future Fund would close to new entrants on 31 January 2021. This extended the previously scheduled closing date of 30 November 2020.
Additional changes announced
Back in September the Chancellor also announced these changes to the various schemes.
Bounce Back Loan Scheme (BBLS)
The BBLS provides loans of between £2,000 and £50,000, capped at 25% of turnover, with a 100% government guarantee. Under the original BBLS, the borrower did not have to make any repayments for the first 12 months, with the government covering the first 12 months’ interest payments. The maximum loan repayment term was six years.
On 24 September, the Chancellor announced ‘Pay as You Grow’ options for BBLS . This meant:
- New and existing borrowers will have the option to repay their loan over a period of up to ten years.
- UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months. This option can be used up to three times.
- Alternatively, businesses can pause their repayments entirely for up to six months, although this option is only available after six payments have been made and can be used just once.
Fore more information see here.
Coronavirus Business Interruption Loan Scheme (CBILS)
With the CBILS – lenders will be allowed to extend the term of a loan up to ten years, while retaining the benefit of the 80% government guarantee.
Coronavirus Large Business Interruption Loan Scheme (CLBILS) and The Future Fund
The Coronavirus Large Business Interruption Loan Scheme (CLBILS) will continue in its current form until the end of January 2021, as will the Future Fund. The Future Fund provides matching convertible loans to innovative businesses
Covid-19 Corporate Financing Facility
The Covid-19 Corporate Financing Facility, targeted at large businesses and operated by the Bank of England, will now remain open until 22 March 2021. Where a company has exhausted all other options, and is of strategic importance to the UK, the government may also consider providing bespoke financial support.
A summary of the support available via the different schemes
Business Bounce Back Loan Scheme – Small businesses can borrow between £2,000 and £50,000. The loans will be interest free for the first 12 months. View more information here.
Coronavirus Business Interruption Loan Scheme (CBILS) for small to medium sized businesses, the Government will provide loans of up to £5m per business with no interest for 12 months. The British Business Bank has outlined more details of the CBILS. View it here.
Coronavirus Large Business Interruption Loan Scheme (CLBILS) for larger businesses with a turnover of more than £45m impacted by COVID-19. This is delivered through commercial lenders, with a Government guarantee of 80%. View more information here
The Covid-19 Corporate Financing Facility (CCFF) for large firms – the Bank of England will buy short term debt from larger companies. This will support a company if it has been affected by a short-term funding squeeze, and allow it to finance its short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. See more information here
Future Fund – The £500 million Future Fund is delivered in partnership with the British Business Bank. It provides UK-based companies with between £125,000 and £5 million from the Government, with private investors at least matching the Government commitment. The loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. See more information here.
Alternatives to the Government loans
In addition to the Government support, other lenders are initiating financing options to help businesses in areas such as spreading the cost of equipment purchases, short-term loans, finance against unpaid loans etc.
One particular resource we recommend is Capitalise. This is a platform where businesses can find, compare and select the right lender in a matter of minutes. As well as finding lenders who specialise in your industry, you’ll also find lenders most likely to give you an offer.
Capitalise cover finance for a wide range of areas including asset finance (funding for any asset), invoice finance (using your invoices to get funding), merchant cash advance (using your credit card transactions to get funding), trade finance (paying for goods based on an order), working capital loans (to finance everyday operations) and property finance (to gain access to bridging loans, development and commercial finance).
Also talk to one of our team for introductions to other providers of finance.
Can we help?
We will continue to monitor the announcements from the Government and update this page if changes occur. In the meantime, please do get in touch with your usual Shipleys’ contact if you need any further advice or call one of our offices.
London: +44 (0)20 7312 0000 or email advice@shipleys.com
Godalming: +44 (0)1483 423607 or email godalming@shipleys.com
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary, if you would like advice or further information, please speak to your usual Shipleys contact.
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