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Bounce Back Loan Scheme
Update 2 November 2020: Deadline for applications extended to 31 January 2021. The Bounce Back Loan scheme will have the option to repay over 10 years (previously 6) and move to interest only/pause repayments for a 6 month period.
The bounce back loans are designed for small and medium sized businesses, to borrow between £2,000 and £50,000. The scheme started on 4th May 2020. Under the scheme, the government provides a guarantee for 100% of the loans of terms of up to 6 years (instead of 80% under the CBILS). There are no fees or interest charges for the first 12 months and, importantly, no repayments for the same period.
Criteria for applying are:
- The borrower needs to be UK based
- Established by 1 March 2020
- It must be negatively affected by Covid-19
- It must not be “an undertaking in difficulty” at 31 December 2019 (this is not defined in the guidance but may well come from an EU definition where an undertaking is in difficulty if accumulated losses exceed half of issued share capital)
- A business cannot apply if it has already applied under the CBILS scheme, CLBILS or covid-19 corporate financing facilities
- Click here to see a full list of entities that cannot apply for the Bounce Back Loan
Who cannot apply;
- Businesses from any sector can apply, except:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
Businesses that have secured lending under the CBILS scheme will be able to move the lending to a loan under this scheme until 4 November 2020.
The government have now issued a definition of a business in difficulty “A business is considered in difficulty if met any one of the following criteria on 31 December 2019:
- Individuals or companies that have entered into collective insolvency proceedings;
- Limited companies which have accumulated losses greater than half of their share capital in their last annual accounts (this does not apply to SMEs less than 3 years old[6]);
- Partnerships, limited partnerships or unlimited liability companies which have accumulated losses greater than half of their capital in their latest annual accounts (this does not apply to SMEs less than 3 years old);
- Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan;
- A company which is not an SME where, for each of the last two accounting years: i) your book debt to equity ratio has been greater than 7.5; and ii) your EBITDA interest coverage ratio has been below 1.0”
The list of lenders is: AIB, Bank of Ireland UK, Bank of Scotland, Barclays, Clydesdale Bank & Yorkshire Bank, Danske Bank, HSBC, Lloyds Bank, NatWest, Santander, Skipton Business Finance, Starling Bank, The Co-operative Bank, TSB, Royal Bank of Scotland, Ulster Bank.
The Coronavirus Business Interruption Loan Scheme (CBILS)
Update 3 November: The Coronavirus Business Interruption Loan Scheme (CBILS) was set to end on 30th November. However, with the announcement of a 4-week national lockdown in England, the Chancellor has provided a further extension to the scheme to 31st January 2021. This means you have until this date to start an application for a CBILS loan.
Update 24 September 2020: CBILS borrowers can borrow for up to 10 years.
The British Business Bank operates CBILS via its accredited lenders, listed on the British Bank website. There are over 40 of these lenders currently working to provide finance. They include:
- high-street banks
- challenger banks
- asset-based lenders
- smaller specialist local lenders
These lenders can provide up to £5 million available on repayment terms of up to six years. Loans can be in the form of:
- term loans
- overdrafts
- invoice finance
- asset finance
The CBILS gives the lender a government-backed guarantee for the loan repayments to encourage more lending. The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any charges levied by the lender.
The UK Coronavirus Business Interruption Loan Scheme has ensured many businesses stay solvent during the coronavirus pandemic. We recently helped Hawk Express, local private car hire company apply for the scheme. Read more in our case study.
The borrower remains fully liable for the debt.
Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000.
For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:
- recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied;
- a Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility
Coronavirus Large Business Interruption Loan Scheme
On 26 May the Government made a number of changes to Coronavirus Large Business Interruption Loan Scheme (CLBILS) designed to make the scheme more generous to businesses. Eligible borrowers can borrow up to a maximum facility of £200m. This replaced previous limits of up to £25m for businesses with group turnover up to £250m and £50m for businesses with higher turnover. For more information about the scheme please visit our dedicated CLBILS page.
Grant Funding
Local authorities have received funding from the government to provide grants to businesses under various schemes:
Local Restrictions Support Grant (LRSG)
Update 29 October: Following the announcement of changes in the support available to businesses in areas with both high and very high COVID alert levels, this guidance is being revised. We will update this section as soon as new information becomes avilable.
The Local Restrictions Support Grant (LRSG) supports businesses that have been required to close due to temporary COVID-19 local lockdown restrictions imposed by the government.
Your business may be eligible if it:
- occupies property on which it pays business rates
- is in a local lockdown area and has been required to close because of the formal publication of local restrictions guidance that resulted in a first full day of closure on or after 9 September. This funding is not retrospective
- has been required to close for at least 3 weeks because of the lockdown
- has been unable to provide its usual in-person customer service from its premises
How to apply: Visit your local council’s website to find out how to apply: Find the website for your local council.
Additional Restrictions Grant (ARG)
The Additional Restrictions Grant (ARG) is funding for local authorities to support businesses in their local economies.
Small Business Grant Fund
Businesses that were eligible for relief for business rates under the Small Business Rate Relief or Rural Rate Relief schemes as at 11 March 2020 will receive a grant of £10,000.
Exclusions include where properties are occupied for personal use, are car parks or parking spaces.
Retail Hospitality and Leisure Grant Fund
Businesses in the retail, hospitality or leisure industries are eligible for a grant of either £10,000 or £25,000 depending on the rateable value of the property.
If your property has a rateable value of up to and including £15,000, you will receive £10,000 grant funding. If your property has a value of over £15,000 but less than £51,000 you will receive a grant of £25,000, subject to meeting other criteria.
There is no grant funding if your property has a rateable value of over £51,000.
As with the Small Business Grant Fund, assets where there is any personal use, car parks or parking spaces are excluded.
Businesses will be eligible for either the Small Business Grant or the Retail Hospitality and Leisure Grant and will not receive both.
Local authorities will be writing or calling the businesses that are eligible and have started to do so as at 6 April 2020.
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