COVID-19 Support: Latest Developments- Friday 03 April 2020
Government overhauls Coronavirus Business Interruption Loan Scheme
The Government has introduced changes to the Coronavirus Business Interruption Loan Scheme (CBILS), to improve the accessibility of emergency funding. The scheme has come under criticism since it launched last month, with firms reportedly deterred from accessing the support due to certain lenders requiring personal guarantees against loans.
Under the revised scheme, lenders will be prevented from asking business-owners to guarantee loans of £250,000 or less with their own savings or property. Personal guarantees may be required for facilities above £250,000, but will be capped at 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A principal private residence may not be used as security under the scheme.
The requirement that businesses be unable to borrow on normal commercial terms before accessing CBILS has also been scrapped, and insufficient security is no longer a condition for accessing the scheme.
The above changes will be applied retrospectively by lenders.
New emergency loan scheme for larger businesses
The Government has announced a new Coronavirus Large Business Interruption Loan Scheme (CLBILS), under which the Government will give an 80% guarantee against emergency loans made to businesses which have been financially impacted by the COVID-19 outbreak.
CLBILS will be available to businesses with an annual revenue of between £45 million and £500 million, and who are unable to secure regular commercial financing. The scheme will cover loans of up to £25 million.
This new scheme comes in light of reports of a “mid-market” gap, which saw some larger businesses miss out on the various support schemes made available by the Government.
CLBILS is expected to launch later this month.
Support announced for busses and community pharmacies
Additional financial support for England’s bus services has been announced. £167 million will be made available over 3 months under the COVID-19 Bus Services Support Grant, to enable operators to maintain necessary services and keep key bus routes running. A further £30 million has been set aside to help local authorities maintain existing services. The £200 million of existing funding under the Bus Services Operators Grant will continue to be paid as normal, despite the reduction in service-demands due to the Coronavirus pandemic.
Community pharmacies are also in line for a cash injection, with £300 million earmarked to assist them in continuing to operate amidst the COVID-19 outbreak. Pharmacy contractors received £200 million on 1 April 2020, and a further £100 million will be paid on 1 May 2020.
For more information on any of the points raised, please contact our corporate team.
