The COVID-19 outbreak is having an economic impact and with this, Government support is being implemented to help businesses.
We’re working internally to look at how we can support our clients during these uncertain times, and the following are just some of the initiatives currently available to businesses.
Covid Corporate Financing Facility (CCFF)
HM Treasury and the Bank of England are coordinating closely in order to ensure that our initiatives are complementary and that they will, collectively, have maximum impact, consistent with the Bank and HM Treasury’s independent responsibilities.
Temporary, but significant, disruptions to supply chains and weaker activity could challenge cash flows and increase demand for working capital from companies.
The CCFF will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy. It will help businesses across a range of sectors to pay wages and suppliers, even while experiencing severe disruption to cashflows.
The facility will offer financing on terms comparable to those prevailing in markets in the period before the Covid-19 economic shock, and will be open to firms that can demonstrate they were in sound financial health prior to the shock. The facility will look through temporary impacts on firms’ balance sheets and cash flows by basing eligibility on firms’ credit ratings prior to the Covid-19 shock. Businesses do not need to have previously issued commercial paper in order to participate.
The scheme will operate for at least 12 months and for as long as steps are needed to relieve cash flow pressures on firms that make a material contribution to the UK economy.
By providing an alternative source of finance for a wide range of companies, the scheme will help to preserve the capacity of the banking system to lend to other companies, including small and medium-sized enterprises, which rely on banks.
This information has been taken from the Bank of England website – the original article and more information on the CCFF can be found by clicking here.
Coronavirus Business Interruption Loan Scheme (CBILS)
At Budget 2020 on Wednesday 11 March, the Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme’, and that it would become available ‘over the coming weeks’.
This has been brought forward, and the new scheme is now expected to become available in week commencing 23 March 2020.
As well as loans, there are many other types of finance supported by the programme, depending on the provider.
It will be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.
The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. NB – the borrower always remains 100% liable for the debt.
The Government will also cover the first 6 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital. The maximum value of a facility provided under the scheme will be £5 million pounds (the original announcement suggested a maximum value of £1.2 million.)
CBILS support a wide range of business finance products, including:
- Term facilities
- Overdrafts
- Invoice finance facilities
- Asset finance facilities
To be eligible for support via CBILS, the small business must:
- Be UK based, with turnover of no more than £41 million per annum
- Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support)
- Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
- Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements
- Full eligibility criteria will be published shortly
Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.
This information has been taken from the British Business Bank website – the original article and more information on the CBILS can be found by clicking here.
Readiness to supply ventilators and ventilator components
The Department for Business, Energy and Industrial Strategy is looking for organisations who can support in the supply of ventilators and ventilator components across the United Kingdom as part of the Government’s response to COVID-19. These questions aim to identify the suitability and readiness of organisations to be involved in the initiative.
Any businesses able to assist with this, are asked to register their details with BEIS here.
R&D Tax Relief
If your company (it has to be limited and eligible to pay UK corporation tax if it were profitable) has been involved in technical projects of any kind, there is a strong chance that HMRC’s R&D Tax Credit Scheme could benefit your company.
HMRC allow you to look at the two previous tax years plus the one you are in. If you have paid tax for either of the two previous tax years, you should be able to reclaim a chunk of this – that’s money straight in to your cash flow in, typically, 8 weeks.
Contact us for more information.
Useful Links
We’ve also gathered together a handful of links to reliable sources, which you can use to keep up-to-date with the business support measures being put into place:
Chancellors Speech 17th March 2020
Visit Britain Latest Information for Businesses
Gov.uk’s COVID-19 Support for Businesses
The above article was generously contributed by Medilink EM Patron, TBAT Innovation.