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Special Report Government support available in the wake of Covid-19 April 2020

Government support available in the wake of Covid-19

As the Coronavirus pandemic forces the UK population to stay at home, companies and employees alike are left with uncertainty regarding cash, debt and staff. In the past two weeks, the Government has set out a wide-ranging package of measures to support businesses through this period of disruption, further details of which are summarised below. These measures now include: Government-backed financing schemes to support short and medium-term liquidity • a job retention scheme for workers paid via PAYE • an income support scheme for self-employed workers • a statutory sick-pay rebate scheme • business support grants for SMEs, with enhanced grants for leisure and retail businesses • business rates relief • deferred VAT and income-tax payments The Government is regularly reviewing the measures it has announced and in particular has recently made changes to the eligibility criteria for its SME loan scheme. While the information in this report reflects our understanding of the measures as at the [8] April 2020, it is important that businesses take professional advice before accessing the support outlined below. If you have any questions around any of the measures mentioned in this report, please contact Michael Hall at michael.hall@keebles.com or any member of the Keebles team.

Government backed loans

Coronavirus Business Interruption Loan Scheme (CBILS)

The temporary Coronavirus Business Interruption Loan Scheme ( CBILS ) launched on 23 March 2020 and is intended to support small and medium-sized businesses (those with turnover under £45M) with access to loans, overdrafts, invoice finance and asset finance of up to £5 million over terms of up-to six years.

On 3 April, the Government announced updates to the CBILS, which included:

• a removal for the requirement for personal guarantees for loans less than £250,000 • a cap on personal guarantees on loans above £250,000 to 20% (being the proportion of the loan which is not guaranteed by the Government) • a relaxing of the lending criteria to allow more businesses to access the scheme by removing the test as to whether the applying business could otherwise access finance The scheme is now open for applications. All major banks and a variety of other lenders are offering this scheme. James Burdekin, a Senior Associate in our Corporate team discusses these loans further here and here.

Government backed loans

Coronavirus Large Business Interruption Loan Scheme

In addition to updating the CBILS, the Government announced on 3 April that it would be establishing the Coronavirus Large Business Interruption Loan Scheme ( CLBILS ) to support those businesses who did not qualify for the CBILS but were not of a size where the Government’s large business scheme (discussed below) would be easily accessible. The CLBILS will be open to businesses with a turnover between £45M and £500M and will operate in a similar manner to the CBILS; with loans of up to £25M available, which will be 80% guaranteed by the Government. While we await full details of the scheme, the Government has confirmed that the 12-month interest free period available to borrowers under the CBILS will not apply to facilities under the CLBILS.

The CLBILS is due to launch in April 2020.

Covid Corporate Financing Facility Aimed at large companies that make a “material contribution to the UK economy”, the Covid Corporate Financing Facility ( CCFF ) scheme involves the Bank of England acquiring commercial paper of the relevant businesses at pre-Covid-19 market rates. The CCFF scheme will be open for at least 12 months and eligible companies should speak to their bank/finance provider for further information.

Keebles Comment

While the Government-backed loan schemes detailed above have been welcomed by business groups, there are concerns with the speed at which this funding can be made available to businesses, in particular SMEs, who are in many cases experiencing immediate and severe cash-flow pressure. The updates to the CBILS announced by the Government recently are intended to simplify the application process and many lenders are putting in place streamlined application processes for loans below £250,000, but we are aware that lenders are experiencing a large number of enquiries in relation to these loans and are in some circumstances having difficulty processing all applications at the speed businesses require. Businesses that are able to quickly provide accounting and other information which shows that, in normal circumstances, the loan would be affordable as well as evidence of the other action the business has taken in relation to its cash-flow (for instance, by taking advantage of some of the other measures highlighted in this note) will stand the best chance of getting applications approved and loans made available quickly. If you have any concerns about the anything mentioned in this report, please contact email Michael at michael.hall@keebles.com.

Michael Hall Partner

e: michael.hall@keebles.com

T +44 (0)114 276 5555 keebles.com For a list of our offices visit our website.

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