What funding support is available to me and my business from the Government?

The Government has announced a raft of measures to assist businesses who require funding support through a variety of initiatives. The main one being the Coronavirus Business Interruption Loan Scheme (CBILS). Announced by The Chancellor during Budget 2020, but finalised recently, this new scheme is one that will provide support to small to medium-sized enterprises (SMEs), across the UK, who are experiencing disruptions to their cashflow.

The key features and eligibility criteria of the scheme are briefly summarised below:

• Established for businesses with a turnover of up to £500 million: This scheme allows businesses from all sectors to apply for funding if they are based in the UK with an annual turnover that doesn’t exceed the specified amount, and have a borrowing proposal which demonstrates that the business was viable pre-COVID-19.
• Up to £25 million facility: This lending scheme is via the British Business Bank and covers a wide range of products, including term loans, overdrafts, asset finance and invoice finance. These are available on repayment terms of up to six years. However, it's worth noting that for businesses with a turnover of up to £45 million, the maximum facility is £5 million.
• 80% government-backed guarantee: The scheme provides the lender with a government-backed guarantee against 80% of the outstanding facility balance. This is useful in terms of the potential to convert a decision from rejection of a loan to acceptance. However, it’s important to note that the borrowing business will remain 100% liable for the debt.
• No personal guarantees (PGs) required for loans up to the value of £250,000: Banks are entitled to seek a PG for larger loans, but this is capped at the portion of the loan not underwritten by the Government and lenders cannot take a charge over the borrower's primary residence.
• No guarantee fee for SMEs to access the scheme: The scheme doesn’t require SMEs to pay an access fee in contrast to the lenders who will be required to pay a fee.
• Interest and fees paid by the Government for a year: The scheme allows for smaller businesses to benefit from no upfront costs and low initial repayments as the Government will make a Business Interruption Payment to cover the first year of interest and any lender fees. This will help to reduce the pressure on smaller businesses by giving them a year in which to recover and continue as before.
• Finance terms: The scheme naturally offers different finance terms depending on the product required. For term loans and asset finance facilities, the finance terms are up to six years. Whereas, for overdrafts and invoice finance facilities, terms are up to three years.
• Security: The scheme will, at the discretion of the lender, allow businesses to apply for unsecured lending facilities of £250,000 and under. For anything above £250,000, the lenders will typically seek to take appropriate security where it is available.

Another measure the Government has taken is to introduce a £25,000 grant for businesses operating from smaller units across the retail, hospitality and leisure sectors. Any queries for this should be directed to the relevant local authority. In addition, a 12-month business rates holiday has been introduced for these sectors and businesses should expect to receive new bills form their local authority. 

Whilst there is ample guidance to help businesses complete applications, extra help and support may be what you need. Having spoken to banks, we are hearing that applications supported by advisers are typically being processed more smoothly, and so, please don’t hesitate to contact one of our team of experts who will be happy to help or alternatively, please fill in the form below.