*Budget 2021 update: From 6 April, and once current Covid loan schemes end, the Government will introduce the Recovery Loan Scheme that will provide support to businesses – in the form of loans up to £10m per business – as they re-open until 31 December. Organisations will be able to apply for a loan if they are trading in the UK and they can show that the business:

• is viable or would be viable were it not for the pandemic
• has been impacted by the coronavirus pandemic
• is not in collective insolvency proceedings – further details will be provided in due course

Business that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under this scheme, if they meet all other eligibility criteria.*

The Government has announced £billions in loans and guarantees to support businesses affected by COVID-19. This page includes information on

• Coronavirus Business Interruption Loan Schemes
• “Bounce Back” Loans of £2k-£50k
• COVID-19 Corporate Financing Facility
• Government funding to support high-growth companies and research and development
• Government Business support finder tool

An overview of the Small Business Grant Fund and Retail Hospitality and Leisure Grant in England can be found here. Specific funding schemes are also available in Scotland, Wales and Northern Ireland.

Coronavirus Business Interruption Loan Schemes

The Government announced two, separate versions of the Coronavirus Business Interruption Loan Scheme, both delivered by the British Business Bank to provide funding for organisations.

The Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses, with an annual turnover of up to £45 million, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years.

The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.

Additionally, the Government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to small and medium-sized businesses.

Organisations are eligible if they:

• are based in the UK
• have an annual turnover of up to £45 million
• have a borrowing proposal which the lender would consider viable, if not for the coronavirus pandemic
• can self-certify that the business has been adversely impacted by coronavirus.

The scheme has a requirement that 50% of the applicant’s income must be derived from its Trading Activity – however, following lobbying by CTG and others registered charities are excluded from this requirement. Charities are in principle eligible if they satisfy the other eligibility criteria of the Scheme.

The Coronavirus Large Business Interruption Loan Scheme supports large businesses, with an annual turnover of over £45 million, with up to £25 million of finance. Organisations with a turnover of more than £250 million can apply for up to £50 million of finance.

Organisations are eligible if they:

• are based in the UK
• have an annual turnover of over £45 million
• can self-certify that your business has been adversely impacted by coronavirus
• have not received a facility under the Bank of England’s COVID-19 Corporate Financing Facility
• have a borrowing proposal which the lender:
  • would consider viable, if not for the coronavirus pandemic
  • believes will enable the organisation to trade out of any short-term to medium-term difficulty.

Coronavirus Bounce Back Loan Scheme

The Government has launched the Bounce Back Loan scheme, which aims to help small and medium-sized businesses to borrow between £2,000 and £50,000 (capped at 25% of turnover). The Government will guarantee 100% of the loan and there won’t be any fees or interest to pay for the first 12 months.

Loan terms will be up to 6 years, with no repayments due during the first 12 months. The Government will work with lenders to agree a low rate of interest for the remaining period of the loan (capped at 2.5%). No guarantee fee is charged and there are no scheme lender fees. The scheme will be delivered through a network of accredited lenders. A briefing for potential lenders, prepared by the British Business Bank, provides additional information on the scope of the scheme. Personal guarantees cannot be taken by a Lender for BBLS facilities. No recovery action can be taken against either a borrower’s principal private residence or their primary personal vehicle

In the first instance, organisations should approach their own provider but they may also consider approaching other lenders if they are unable to access the required finance. A short, online application form will need to be completed, which self-certifies that the organisation is eligible for a loan under the scheme. If eligible, it will be subject to appropriate customer fraud, Anti-Money Laundering and Know Your Customer checks. Some state aid restrictions may apply to your application.

Guidance on the application process is now available. Eligible organisations must be able to self‑declare to the lender that it:

• Is based in the UK
• Has been impacted by the coronavirus (COVID-19) pandemic
• Was not a business in difficulty at 31 December 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules)
• Is engaged in trading or commercial activity in the UK and was established by 1 March 2020
• Is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility
• Is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
• Derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges)
• Is not in a restricted sector. The following businesses are not eligible to apply: banks, insurers and reinsurers (but not insurance brokers), public-sector bodies, state-funded primary and secondary schools. You cannot apply if you’re already claiming under the CBILS or CLBILS (unless the borrower’s liability under the latter will be wholly refinanced by the BBLS facility).

The British Business Bank has published FAQs that also compares the scheme to the Coronavirus Business Interruption Loan Scheme.

Covid-19 Corporate Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms. All non-financial companies that meet the criteria set out on the Bank of England’s website are eligible. The scheme is now available for applications and more information is available from the Bank of England.

The facility is also open to large housing associations that continue to be assessed as V1 grade for viability from the Regulator for Social Housing. The Bank of England will also assess housing associations’ revenue streams. Housing associations are also expected to meet the existing eligibility requirements.

Companies – and their finance subsidiaries – that make a material contribution to the UK economy are able to participate in the facility. Companies must do this via a bank. The facility is open to organisations that can demonstrate they were in sound financial health prior to the shock, meaning companies that had a short or long-term rating of investment grade, as at 1 March 2020, or equivalent.

In practice, firms that meet this requirement would normally be:

• UK incorporated companies, including those with foreign-incorporated parents and with a genuine business in the UK
• companies with significant employment in the UK
• firms with their headquarters in the UK.

Government funding to support high-growth companies and research and development

The Chancellor has announced a new £1.25bn coronavirus package to protect firms driving innovation in UK. The package includes a £500 million investment fund (the Future Fund) for high-growth companies impacted by the crisis, made up of funding from government and the private sector. SMEs focusing on research and development will also benefit from £750 million of grants and loans. The Chancellor said the targeted and tailored help would ensure firms in some of the most dynamic sectors of the UK economy – ranging from tech to life sciences – are protected through the crisis so they can continue to develop innovative new products and help power UK growth. Further detail on eligibility criteria and fund operation will be published in due course. CTG will be working with AMRC and other interested parties to see if medical research charities can access any of this important funding.

Government launches new coronavirus business support finder tool

The Government has launched a new ‘support finder’ tool to help businesses and self-employed people across the UK to quickly and easily determine what financial support is available to them during the coronavirus pandemic. The tool asks business owners to fill out a simple online questionnaire, which can take minutes to complete, and they will then be directed to a list of all the financial support they may be eligible for.

In a press release promoting the tool, the various support measures that have been announced (all of which are covered in this hub) are listed, confirming that the Government has:

• made up to £330 billion of loans and guarantees for businesses
• offered to pay 80 per cent of the wages of furloughed workers, up to £2,500
• deferred the next quarter of VAT payments for firms, until the end of June – representing a £30 billion injection into the economy
• introduced £20 billion in tax relief and cash grants to help businesses with cash flow
• introduced the Coronavirus Business Interruption Loan Schemes for both SMEs and larger businesses to make it easier to access vital financial support
• offered to cover the cost of statutory sick pay
• entirely removed all eligible properties in the retail, hospitality and leisure sector from business rates temporarily;
• introduced the Self-employment Income Support Scheme, offering a taxable grant worth 80% of trading profits up to a maximum of £2,500 a month
• deferred Self Assessment payments due in July 2020 until 31 January 2021
• allowed companies required to hold AGMs to do so flexibly, which may include postponing them or holding them online;
• suspended wrongful trading provisions for company directors to remove the threat of personal liability during the pandemic; and
• offered a 3 month extension for filing accounts to businesses hit by coronavirus.

The Charity Tax Group is working with NCVO and the Charity Finance Group to assess how useful the various measures have been to charities. So far the general feedback has been that the Job Retention Scheme has been helpful to many charities, although clearly does not work for all. The ability to defer VAT payments (without interest) is helpful in terms of cashflow, but payment will still need to be paid at some point. The business rates reliefs and grant funding for charities in the retail, leisure and hospitality sectors is also helpful but it does not benefit other charities which have had to suspend operations. The inability to access the Small Business Grant Fund is also a frustration and this makes knowing details of the charity support package measures for small charities even more pressing. The least useful measures appear to be the various loans schemes, which are either inaccessible or unattractive to charities in many cases. When considering all these measures it is important to remember that charities continue to have fixed overheads, but have faced a dramatic loss (not deferral) of income. Please share feedback that can be incorporated into this review by e-mailing info@charitytaxgroup.org.uk.