Government financial support for large and small businesses

The government has announced a number of measures to support business during the  coronavirus crisis including loan support in the form of CBILS and CCFF. We have drawn together current material on eligibility from the Bank of England and the British Business Bank summarising the eligibility criteria so you can determine whether your organisation meets them.

The Coronavirus Business Interruption Loan Scheme (CBILS)

• This scheme was originally announced two weeks ago but has now been expanded.
• The original scheme had an individual borrowing limit of £1.2m but this is being increased to £5m.
• The government will cover the first 12 months of interest payments and lender levied fees.
• The government will provide a guarantee of 80% of each loan.
• No fee for SMEs to access the scheme. Lenders will pay a fee to access the scheme.
• The eligibility criteria are as follows:
  • That the business has a turnover of no more than £45m per annum;
  • That it is in an eligible sector (effectively all non-financial sectors);
  • That the business has a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty; and
  • 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.
• The British Business Bank has stated:
  • Any small business interested in CBILS should approach one of the 40+ accredited lenders;
  • If these lenders can offer finance without the need for CBILS they will do so;
  • The CBILS guarantee is to the lender and not the business. As with any other commercial transaction, the borrower is always 100% liable for repayment of the facility supported by CBILS.

The Covid Corporate Financing Facility (CCFF)

• The Bank of England will provide funding to businesses by purchasing commercial paper of up to one year maturity.
• The facility will offer terms that were prevailing in the market prior to the Covid-19 crisis.
• It will be open to firms of any size that:
  • make a material contribution to the UK economy and are a non-financial company; and
  • have been in sound financial health prior to the Covid-19 shock.
• Eligibility will be based on the company’s pre-Covid-19 shock credit rating.
• It is not necessary that the issuer has previously issued commercial paper.
• The minimum size of an individual security that the Fund will purchase from an individual participant is £1 million.
• The application forms will be published on the Bank of England’s website today.