There are a number of government financial support schemes available for small to medium sized businesses in the current climate. As of 5 November 2020, the deadline for applications to the BBLS, CBILS and Future Fund has been extended to 31 January 2021.

Please note that the CBILS cannot be used in conjunction with any other form of support, including the BBLS unless the existing loan owed is paid off with the new scheme being taken out.

What are the various financial support schemes available?

What follows is a short summary of the key aspects of the schemes and their eligibility criteria.

Start Up Loan (‘SULS’)

This scheme may serve useful for those who are eligible, although it has been in existence since before the impact of the Coronavirus and is not one of the new schemes made available by the government. The SULS is an unsecured personal loan for businesses that have been trading for less than two years. It allows individuals to borrow between £500 and £25,000 per owner (up to £100,000 per business) at a fixed rate of 6% per annum and there are no set up or early repayment fees. The scheme also provides ongoing support for the business, such as helping create a business plan and post-loan support and mentoring.

Bounce Back Loan Scheme (‘BBLS’)

The BBLS is intended for small and medium-sized businesses who have been adversely impacted by the Coronavirus. You may borrow between £2,000 and up to £25% of your turnover with a cap of £50,000 with no personal guarantees required.

There are no interest or lender fees to pay for the first 12 months as these are covered by the government, and the interest rate after 12 months is a fixed rate of 2.5% per annum. The length of the loan is 6 years and no repayments are due in the first 12 months. Early repayment is allowed without paying a fee.

To be eligible your business must:

• be based in the UK;
• have been established before 1 March 2020; and
• have been adversely impacted by the Coronavirus.

There are also further declarations that borrowers must make, which can be found on the FAQ link below.

Coronavirus Bounce Back Loan Scheme (‘CBILS’)

The CBILS is also available for those adversely impacted by Coronavirus, allowing a higher borrowing limit than the BBLS. The CBILS allows borrowing between £50,001 and £5m and can be used for a range of business finance facilities, including: term loans, overdrafts, asset finance and invoice finance. Although, if you are only utilising asset or invoice financing this can be lower than £50,001. Personal guarantees may also be required for borrowing in excess of £250,000.

There are no interest or lender fees to pay for the first 12 months as these are again covered by the government. It is important to note that the interest rate is not fixed as with BBLS; interest rates and fees are set by lenders and may vary. The maximum length of the facilities are up to 3 years for overdrafts and invoice finance, or up to 6 years for loans and asset finance.

To be eligible your business must:

• be based in the UK;
• have an annual turnover of not more than £45m;
• not be a bank, insurer or reinsurer (but not insurance brokers); a public-sector body or state-funded primary or secondary school;
• have a borrowing proposal which the lender would consider viable, were it not for the current pandemic;
• self-certify that it has been adversely impacted by the Coronavirus; and
• not be classified as a business or ‘undertaking’ in difficulty.

Future Fund

The Future Fund is intended for innovative businesses with good potential that would usually rely on equity investment but are struggling with cash flow due to the Coronavirus. The scheme issues convertible loans between £125,000 up to £5 million, which will eventually convert into shares in the company in specified circumstances. This scheme has more stringent eligibility criteria so the overview on the British Business Bank website should be considered carefully. The deadline for applications is 31 January 2021.

To be eligible the company must meet the following criteria:

• the company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive);
• if the company is a member of a corporate group, it must be the ultimate parent company;
• the company does not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue;
• the company must be a UK-incorporated limited company or be eligible to apply as a non-UK parent company;
• the company must have been incorporated on or before 31 December 2019 (or if you are a non-UK jurisdiction company, this criterion applies only to at least one UK subsidiary operating company); and
• at least one of the following must be true for the company (this criterion applies to your group):
  • half or more employees are UK-based; or
  • half or more revenues are from UK sales.

Further Information

The loans are operated by the British Business Bank and their website should be consulted to find a list of accredited lenders.

Additional information and details on how to apply can be found at:

• FAQ for CBILS
• FAQ for BBLS
• Future Fund
• Start Up Loans

If you would like to discuss financial support that may be available to your company please contact a member of the Banking & Finance team.

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This blog was co-authored by Louis Iveson, trainee solicitor and Liam Doughty, partner.