COVID-19 loan schemes: The Treasury’s emergency extensions

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Originally rolled out on 23 March 2020 and due to close for applications at the end of November 2020, the three loan schemes below and the government’s Future Fund, have all been extended until 31 January 2021.

SMEs and larger businesses: Coronavirus Business Interruption Loan Scheme (CBILS)

Open to UK-based SME’s with a turnover of up to £45 million, CBILS allows eligible businesses to borrow up to £5 million for up to 6 years.

More information here.

Larger businesses: Coronavirus Large Business Interruption Scheme (CLBILS)

For larger businesses with a turnover of more than £45 million, CLBILS offers eligible applicants the opportunity to borrow up to a maximum of £200 million for a term of up to 3 years.

More information here.

Smaller businesses: Bounce Back Loan Scheme (BBLS)

If your business does not meet the eligibility requirements for CBILS or CLBILS, the Bounce Back Loan Scheme offers an alternative loan for smaller businesses up to a maximum of 25% of their annual turnover.

Under the new rules, small businesses who have previously borrowed less than the maximum 25% of turnover will also be allowed to apply for a top-up on their current loan. However, they will only be able to use this once.

Borrowers should be mindful that many lenders are no longer offering BBLS to new customers, with some lenders having a waitlist for eligible borrowers as they prioritise those with an established business and those who have a primary account with that lender.

It’s a good idea for borrowers considering this form of finance to speak to their lender about the availability of this funding before making an application.

More information here.

The UK Government Future Fund

For businesses unable to meet the eligibility criteria and access the above government support programmes, a fourth option is available: the ‘Future Fund’. It allows UK-incorporated early-stage high growth businesses to apply for convertible loans between £125,000 and £5 million, provided they receive equal match funding from private investors.

To be eligible, businesses must:

  • have been incorporated before 31 December 2019
  • raised at least £250,000 in equity investment from third-party investors in the last five years with none of its shares being traded on a regulated market, multilateral trading facility, or other listing venue
  • have at least half of its employees based in the UK or at least half of its revenues coming from UK sales

This extended support is going to come as a welcome relief to many business owners, who are not only looking to carry on trading as normal but are also in need of finance to grow their existing business.

While concern has grown about the loan schemes being vulnerable to fraud, the government has taken the view that the need to secure people’s jobs and keep businesses alive outweighed the risk of forgoing some of the usual checks to make the process more streamlined.

With almost £65.5 billion delivered to businesses through the government’s support schemes since their inception, the popularity of the schemes may result in further extensions being made next year in order to provide continued funding to UK businesses to help support them through this unprecedented and extremely difficult trading period and the months that lie ahead.