As part of his Winter Economy Plan, the Chancellor has announced the extension of four temporary loan schemes to 30 November 2020 for new applications.
Bounce Back Loan Scheme (BBLS)
This scheme helps small and medium-sized businesses affected by COVID-19 to apply for loans of between £2,000 and £50,000. Loans are capped at 25% of turnover, guaranteed 100% by the Government and borrowers do not have to pay any fees or interest payments for the first twelve months.
Now, under the new Pay as you Grow options, all BBLS borrowers will have more time and greater flexibility to make their repayments without affecting their credit ratings. Measures including:
- the option to repay their loan over a period of up to ten years, reducing average monthly repayments on the loan by almost half
- UK businesses will also be able to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), and
- UK businesses can also choose to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments).
Your usual Sagars manager can help you to understand if the BBLS is appropriate for you.
Coronavirus Business Interruption Loan Scheme (CBILS)
In short, CBILS provides help to small and medium-sized businesses to access loans and other kinds of finance up to £5 million. The Government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months.
CBILS lenders will now be allowed to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
This scheme supports medium and large-sized businesses to access loans and other kinds of finance up to £200 million, up to a maximum of 25% of turnover, with an 80%, Government guarantee to the lender. It’s a generous scheme when compared with the equivalents that are available in many other countries.
Get in touch with your usual Sagars manager for help in understanding if the CBILS or CLBILS is the right option for your business and, through our partnership with Capitalise which we covered in our previous CBILS blog, we can help you get the finance you need.
This is an investment scheme for innovative and fast-growing UK-based businesses, providing convertible loans ranging from £125,000 to £5 million which are subject to at least equal matching from private investors. Future Fund is an option for businesses that rely on equity investment and are unable to access other business support programmes because they are either pre-revenue or pre-profit. Businesses that have already accessed a Future Fund convertible loan can’t apply for another one.
Find out more about eligibility and the Future Fund here.
COVID-19 Corporate Financing Facility
Support will continue through this facility which 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.
There will also be a new loan scheme announced in January 2021 but no further details are available at the moment.
The extension to these loans and the new payment measures are good news for businesses who are facing cashflow challenges and uncertainly as a result of COVID-19. If you need help accessing appropriate funding, we have good relationships with a variety of third-party providers and can point you in the right direction, just get in touch with your usual Sagars contact or Paul Lodder.
Winter Economy Plan
Alongside the loan scheme announcements, the Chancellor’s Winter Economy Plan included the launch of the Job Support Scheme which is covered in more detail in Ali Jones’ JSS blog. There were also some welcome changes for the self-employed, VAT registered businesses and those paying tax through self-assessment, which you can read about in Kate Naylor’s tax blog.
Our COVID-19 hub is still full of guidance and advice about the various measures that you might be able to benefit from and our team are happy to help you with any queries, just get in touch with your usual Sagars contact or call our office on 0113 297 6789.