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 follows is a short summary of the key aspects of the schemes and their eligibility criteria.
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.
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:
There are also further declarations that borrowers must make, which can be found on the FAQ link below.
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:
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 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:
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.