Applying for a COVID-19 emergency loan

In response to the increasing impact of COVID-19 on the UK public and our economy, the Chancellor Rishi Sunak has unveiled a £350 billion fund to provide funding and to support businesses affected by the coronavirus crisis. The unprecedented government measures include both funding-focused initiatives such as the Coronavirus Business Interruption Loan Scheme (CBILS) and COVID-19 Corporate Financing Facility (CCFF) and tax-focused measures including deferrals and employer grants.

Coronavirus Business Interruption Loan Scheme (CBILS)

CBILS provides facilities of up to £5m for SMEs across the UK who are experiencing lost or deferred revenues, leading to potential funding requirements within their cashflow. The programme, provided by the British Business Bank through over 40 selected debt providers, supports a wide range of business finance products, including: term loans, overdrafts, invoice financing and asset financing facilities.

CBILS, which took effect from 23rd March 2020 and will run for at least 6 months, will provide more attractive terms for businesses requiring new debt facilities as well as for lenders with a government-backed guarantee.

Requirements of the scheme are similar to previous government loan guarantee schemes, although it is unfortunately a lot less straightforward to secure than suggested in recent government announcements. However, we at HMT have a vast amount of experience in supporting businesses secure these types of loans.

The critical point to note with this scheme is that it is a relaxation of a lender’s requirements only to the extent that security is not available. Crucially, this means it still needs to meet their lending criteria in all other respects. The lending decision resides with the lender, not some government body, and the lender would still expect to see a detailed business plan and financial forecast demonstrating commercial viability and the long-term ability to repay the loan/facility.

Scheme Highlights

  • There is no guarantee that SMEs will be provided with access to the scheme;
  • Intended for facilities of £250,000 – £5,000,000 on repayment terms of up to six years and/or for overdrafts and invoice finance facilities for up to three years;
  • At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under;
  • The scheme requires the lender to establish a lack of security prior to businesses using CBILSs (Primary Residential Property excluded as security);
  • The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees;
  • The guarantee is to the lender, not the business and the business will remain 100% liable for the debt; and
  • To be eligible your business must be UK based with annual turnover of less than £45m;

Applications to the CBILS require(s) a strong business case supported with a robust business plan and financial forecasts. We have an in-depth knowledge of the market, products and funds and the process and requirement of the lenders to determine whether a business plan demonstrates long term viability and would be successful in its application to CBILS.

COVID-19 Corporate Financing Facility

The COVID-19 Corporate Financing Facility (CCFF) has been put in place by the Bank of England to support larger corporates that were fundamentally sound before the coronavirus crisis. CCFF will enable non-financial businesses to raise short-term financing by purchasing commercial paper.

The focus of CCFF is to provide funding to large businesses to pay wages, suppliers, or to boost cashflows.

The CCFF scheme will run for a minimum of 12 months and more information on how to access the scheme will be released in the next couple of days.

Tax-focused measures

To support businesses through the COVID-19 crisis, HMRC has put several measures in place including:

  • Deferring VAT payments for three months from 20th March 2020 to 30th June 2020 for all businesses
  • HMRC Time to Pay Scheme for all businesses with outstanding tax liabilities
  • Coronavirus Job Retention Scheme for all UK employers to obtain government support by way of them funding 80% of their employees’ salary instead of laying off staff. The scheme has a ceiling of £2,500 a month. There are various other conditions that apply and full guidance of the application and cashflow impacts has yet to be released.
  • Statutory Sick Pay Relief for SME employees who are infected or self-isolating because of Covid-19
  • 12-months business rate holidays for companies operating in the retail, hospitality, leisure and nursery sector
  • Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of pre-existing reliefs but occupies a business based in England.
  • Grant funding of up to £25,000 for retail, hospitality and leisure businesses subject to meeting specified criteria

For more than 28 years we have provided capital and debt advice to businesses, shareholders, management teams and major financial investors, consistently demonstrating our ability to structure the most appropriate funding package for our clients throughout the economic cycle, including three recessions.

If you want to discuss how we can assist you through the current crisis, please do not hesitate to contact us.


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