Government measures in key jurisdictions 4th edition - Flipbook - Page 146
United Kingdom
Contributor: Farrer & Co
Loans and
financial
support
Has the
government put in
place any new
bank funding
schemes?
Anthony Turner | anthony.turner@farrer.co.uk | +44 (0)20 3375 7460
Ian De Freitas | ian.defreitas@farrer.co.uk | +44 (0)20 3375 7471
Lending is available under five new schemes that have been introduced in the UK:
• The Covid Corporate Financing Facility (CCFF) – this scheme provides funding (through
commercial paper being issued by the business and purchased by the Bank of England) to larger
businesses and corporates with investment grade credit ratings in order to support their
liquidity and working capital issues by helping them to, for example, pay wages and suppliers
due to the disruption caused by Covid-19 to their cashflows. The Bank of England publishes the
names of businesses with outstanding commercial paper issued into the CCFF and the amount
outstanding. The CCFF will initially run for twelve months.
• The Coronavirus Business Interruption Loan Scheme (CBILS) – this scheme is designed to
support lending to SMEs (businesses with a turnover of no more than £45 million), that are
experiencing lost or deferred revenues, leading to disruptions in their cashflow. It will initially
run for six months from 23 March 2020 to 30 September 2020. Following calls for an extension
to the CBILS scheme, the British Business Bank (BBB) has now clarified that accredited lenders
now have an extra two months from 30 September 2020 to consider, approve and process
applications for finance under the scheme, which should give more businesses the chance to
access the finance that they need. Following the recent EU changes in State Aid Law relating to
the ‘undertaking in difficulty’ test for businesses, the BBB amended CBILS. The amendment
means that smaller businesses with fewer than 50 employees and less than £9 million in annual
turnover/or annual balance sheet will not be considered undertakings in difficulty unless they
are: (a) subject to collective insolvency procedure under national law, or (b) in receipt of rescue
aid (which has not been repaid) or restructuring aid (and are still subject to a restructuring
plan). Smaller businesses with more than 50 employees or more than £9,000,000 in annual
turnover and/or annual balance sheet will still be subject to the ‘Undertaking in Difficulty’
test as defined by the EU. Applicants will need to determine their turnover and number of
employees in line with Commission Recommendation 2003/361/EC of 6 May 2003 concerning
the definition of micro, small and medium-sized enterprises. This applies from 30 July 2020 and
means lenders may now be able to offer CBILS to businesses who had previously been unable to
access CBILS.
• The Coronavirus Large Business Interruption Loan Scheme (CLBILS) – this scheme is designed to
support lending to mid-sized and larger UK businesses with a group turnover of more than £45
million (the upper limit for CBILS) that are suffering disruption to their cashflow due to lost or
deferred revenues due to the Covid-19 outbreak. Businesses borrowing more than £50 million
through CLBILS will have restrictions on payment of dividends, senior pay and share buybacks
during the period of the loan, including a ban on dividend payments and cash bonuses, except
for where they were previously agreed. The scheme will initially run for six months from 23
March 2020 to 30 September 2020. As at the time of writing, there have been no
announcements from the Government or the BBB whether this scheme will be extended past
30 September 2020.
• Bounce Back Loan Scheme (BBLS) – this scheme was introduced to help provide financial
support to smaller businesses across the UK that are losing revenue and seeing their cashflow
impacted by Covid-19. It aims to assist those businesses to borrow between £2,000 and up to
25% of a business’ turnover (maximum £50,000). It will initially run until 4 November 2020 but
it may be extended by the Government should circumstances warrant it. As at the time of
writing, there have been no announcements from either the Government or the BBB whether
this scheme will be extended past 4 November 2020, but officials have signalled that there is no
intention of doing so.
Government measures in key jurisdictions
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