The Government has introduced financial assistance packages to qualifying businesses as a result of the impact on the economy of COVID-19. Under the two main schemes more than £330 billion of loans and guarantees are now available.

For SME’s, the new COVID-19 Business Interruption Loan Scheme (CBILS) is to help any viable business with a turnover of up to £45m to access government-backed finance of up to £5 million. Interest payments and any lender-levied fees for businesses will be covered by the Government for an initial period of up to twelve months. The scheme will operate such that the government will provide more than 40 accredited lenders with a guarantee of 80% on each facility to encourage them to lend. Details of the accredited Lenders can be found on the British Business Bank Website.

For larger firms The Bank of England’s new lending facility, the COVID Corporate Financing Facility (CCFF), is also open for applications. This scheme provides a quick and cost-effective way to raise working capital for those companies who do not qualify for the COVID-19 Business Interruption Loan Scheme. To be eligible the business must be fundamentally financially strong but are experiencing severe disruption to cash-flows as a result of the COVID-19.

COVID-19 Corporate Financing Facility (CCFF) for larger firms not eligible for CBILS

Under the new COVID-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies not eligible for the CBILS.

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 to assist with their cash flows. In order to be eligible you have to be able to demonstrate that you were financially sound in the period prior to the COVID-19 economic shock. The facility will offer financing on terms comparable to those prevailing in markets in the prior period. Eligibility will not be based on current balance sheet and cash flows but on the firms’ credit rating before the economic shock resulting from COVID-19.

The scheme will operate for at least 12 months and will apply to businesses that make a material contribution to the UK economy.

We hope that this note is helpful. The situation is changing by the day, and even the hour, and so as soon as there is any further information we will share that with you. In the meantime if you need any assistance in your application or completion of the legal documents please do not hesitate to contact the Banking and Finance team.