Government grants and loans

    Contents

  1. Summary of measures
  2. Business rates relief and grant funding
  3. Coronavirus Business Interruption Loan Scheme (CBILS)
  4. Coronavirus Large Business Interruption Loan Scheme (CLBILS)
  5. Future Fund scheme
  6. Bounce Back Loans
  7. Additional support in Scotland, Wales and Northern Ireland

Summary of measures

A number of measures to support businesses were announced at Spring Budget 2020 and subsequently extended by the Chancellor. HMRC has published guidance on the support available to businesses.

These include:

  • an automatic 12-month business rate holiday for all retail, hospitality, leisure and child nursery businesses in England
  • small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief grants
  • grant funding of £25,000 in England for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • similar grant funding schemes in Scotland, Wales and Northern Ireland
  • the Coronavirus Business Interruption Loan Scheme (CBILS) to support small and medium-sized enterprises (SME) with cash flow pressures by providing access to bank lending and overdrafts

Navigate the complexity of tax with Tolley Guidance. Get started with a free trial today.

  • the Coronavirus Large Business Interruption Loan Scheme (CLBILS) to support large businesses, with an annual turnover of between £45 million and £500 million, to access loans of up to £25 million
  • a new lending facility from the Bank of England, the Covid Corporate Financing Facility, to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • the Future Fund scheme to support innovative companies unable to access the Coronavirus Business Interruption Loan Scheme by providing convertible Government loans subject to at least equal match funding from private investors
  • Bounce Back Loan Scheme to be available from 4 May 2020 and provide 100% Government guaranteed loans to SME businesses to borrow between £2,000 and £50,000

Business rates relief and grant funding

Business rates and the grant funding are administered by local authorities. The business rates holiday is applied automatically, and local authorities should write to eligible businesses with a restated 2020/21 bill. Similarly, local authorities should write to businesses that are eligible for the £25,000 grant with further details. Any questions as to the eligibility for the business rates holiday or provision of the grant should be directed to the local authority.

The small business grant funding requires businesses in Northern Ireland to make an application for the grant and provide bank details. In Wales, businesses will need to provide details to their local authority in order to make the claim.

In addition, a discretionary fund has been set up to accommodate some small businesses that are outside the scope of the business grant funds scheme, but which have had a significant drop in income due to the coronavirus measures. Examples include: bed and breakfast businesses that pay council tax rather than business rates, and regular market traders.

Any businesses that are unsure of their local authority can find this information via the tool on the GOV.UK website.

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) is being delivered by the British Business Bank. The Government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) and will not charge businesses or banks for this guarantee. The scheme will support loans of up to £5 million in value. Businesses can access the first 12 months of that finance interest-free, as the Government will cover the first 12 months of interest payments. The intention behind this scheme is to give lenders confidence to continue to lend to SME, but there has been criticism that firms have not been able to, or have been unwilling to, access the loans as intended.

On 3 April 2020, the Chancellor announced changes to the scheme to maximise the support available. Any viable SME is now able to access the scheme, and not just those unable to secure regular commercial financing. In addition, lenders are no longer permitted to request personal guarantees for loans under £250,000. For loans over £250,000, personal guarantees are limited to 20% of any amount outstanding on the loan after any other recoveries from business assets, and the guarantee cannot include the borrower’s house.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) was announced on 3 April 2020. It provides a Government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million which are unable to secure regular commercial financing. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest, and further details of the scheme will be available later this month.

Future Fund scheme

The Future Fund scheme, announced on 20 April 2020, will provide UK-incorporated companies with access to convertible Government loans ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. To be eligible, a company must also have previously raised at least £250,000 in equity investment from third parties in the last five years. The company must have been incorporated before 1 January 2020 and either at least half of its employees must be UK based or at least half of its revenues must be from UK sales. The company’s shares must not be traded on a regulated market, multilateral trading facility or other listing venue. In the case of a corporate group, only the parent company is eligible. Applications can be made from 20 May 2020.

Bounce Back Loans

The Bounce Back Loan Scheme allows small and medium-sized businesses to borrow between £2,000 and £50,000, with the Government guaranteeing 100% of the loan.

Navigate the complexity of tax with Tolley Guidance. Get started with a free trial today.

For the first 12 months, there will not be any interest or fees and no repayments will be due. The loan term will be up to six years, with interest charged after the first year, the rate of which is to be agreed between the Government and lenders.

A business can apply if it is based in the UK, has been negatively affected by coronavirus and was not in difficulties on 31 December 2019.

No claim can be made if a claim has been made under the CBILS, but a loan under CBILS can be transferred to the Bounce Back Loan Scheme.

The scheme will launch on 4 May, and more information can be found in the Government guidance.

Additional support in Scotland, Wales and Northern Ireland

In addition to the measures listed above:

  • in Scotland, extra reliefs are being offered from business rates, and grants can   be accessed through a business support fund
  • in Wales, additional support  is being offered through grants, capital repayment holidays and an Economic Resilience Fund targeting businesses that will not benefit from other measures
  • in Northern Ireland, there is an emergency rates package through which all businesses will pay zero-rates for three months