On 24 September, the Chancellor outlined his winter economy plan with some good news for businesses.
The deadline for applications to CBILS, CLBILS, the Bounce Back Loan Scheme and the Future Fund has been extended to 30 November 2020 (from 30 September). This is useful for businesses yet to apply and those that may be facing additional levels of uncertainty or cash flow problems as a result of the new restrictions.
Other changes include:
- The loan terms for the Bounce Back Loan Scheme and CBILS loans can now be extended from 6 to 10 years
- The introduction of “Pay as you Grow” for Bounce Back Loan Scheme loans, giving more time and flexibility to repay the debt including interest only payments for a longer period and the ability to suspend loan repayments altogether for six months. No business taking up Pay as you Grow will see its credit rating affected as a result
- The extension of the government guarantee (to lenders) on CBILS loans extended for up to ten years, making it easier for lenders to give borrowers more time to repay
- Relaxation of the “Undertaking in Difficulty” test allowing the assessment (of whether a business is an undertaking in difficulty) to be determined at the date of the application rather than 31 December 2019. This means that businesses that wouldn’t previously have qualified for CBILS/CLBILS will now be eligible for the schemes. This flexibility will allow businesses to restructure their finances before applying by converting their debt (such as loan notes) to equity (shares)
- The Treasury is starting work on a new successor loan programme due to commence in January 2021.
Other useful changes aside from those to the loan schemes include the extension of the 15% cut in VAT for hospitality and leisure businesses to 31 March 2021 from 12 January 2021. Also businesses that deferred their VAT bills due in March will now be able to repay in 11 smaller interest-free instalments.
If your business needs to apply for CBILS or CLBILS we can help ensure your documentation is presented in the way we know banks want to see it. Find out more.