After extensive consultation and representations, all businesses will now be able to access some form of government support to assist them during the present Covid-19 crisis.
The Treasury scheme which launched yesterday (20 April), plugs the gap between the scheme designed to support businesses with a turnover up to £45m (known as the Coronavirus Business Interruption Loan Scheme or CBILS) and that for much larger corporate businesses, who are able to issue commercial paper, known as the Coronavirus Corporate Financing Facility (CCFF).
The new scheme, more detail of which is contained on the British Business Banks (BBB) website, will be known as the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and is aimed at all viable businesses who have a turnover in excess of £45m. Those corporates with a turnover of between £45m and £250m will be able to apply for up to £25m of support and those with a turnover of more than that figure will be able to apply for support of up to £50m, repayable over a term of up to three years. The scheme extends to all larger businesses (including those owned by private equity investors) and will extend to the usual raft of financial instruments used by these businesses ranging from term loans, revolving credit facilities (including overdrafts), invoice and asset finance.
As with the CBILS scheme, the support takes the form of a guarantee to the ‘BBB approved’ lending institution of up to 80% of the outstanding balance of the facility, thereby considerably reducing their risk exposure and making it easier for them to fund. The borrower retains full liability for the debt, and for facilities exceeding £250k, personal guarantees may be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.
A key test that will be applied (as elsewhere) is that, prior to Covid-19, the business seeking the relief was viable i.e. capable of ordinarily accessing such funding; a test which previously struggling businesses will be unable to meet.
Our team are here to support you through any application for a CLBILS facility, either by assisting you through the application itself or giving you specialist legal advice on the loan documentation.