More details have become available on how to access some of the business support schemes announced last week.
Coronavirus Business Interruption Loan Scheme (CBLIS)
CBILS is a new scheme that can provide facilities of up to £5m for smaller businesses (annual turnover of max £45m) across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow. It supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
CBLIS opened for applications today (23/03) and will be available for at least six months. Applications can be made through 40+ accredited lenders, which include most major banks. Check if your bank is among them here and make an application directly with them, ideally through their website as phone lines will be very busy. To make sure that your business is eligible for this scheme, have a look at this checklist.
Key features of the scheme are as follows:
- Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
- 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
- No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
- Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
- Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
- Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
- The borrower always remains 100% liable for the debt.
More information on what the scheme offers under which conditions is available here.
Coronavirus Jobs Retention Scheme
As announced on Friday, the UK Government is to pay 80% of wages for employees who are not working but are furloughed and kept on payroll, up to a limit of £2,500 per month/worker, back dated to 1st of March. Employers of all sizes can access this Coronavirus job retention scheme. It will be available for at least three months and there is no limit of funding for this scheme. These grants will be available by the end of April, through a HMRC online portal. Until this time, the deferment of VAT bills and the Coronavirus Business Interruption Loan Scheme, detailed above, is supposed to help companies with immediate cashflow problems.
In preparation of the scheme opening, designate affected employees as ‘furloughed workers,’ where necessary, and notify your employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. Once the new online portal is live, submit information to HMRC about the employees that have been furloughed and their earnings (HMRC will set out further details on the information required).
For more details on how to benefit from these and other support measures, please check first Scottish Enterprise’s coronavirus business support website (https://findbusinesssupport.gov.scot/coronavirus-advice), which keeps on being updated and improved. If you can’t find the right information there, use their helpline at 0300 303 0660 (Mo-Fr, 8.30am to 5.30pm). If you have tax related questions, call HMRC’s dedicated Covid-19 helpline at 0800 015 9559 (Mo-Fr, 8am-8pm and Saturday, 8am-4pm).