The points below are for information only and have been taken from the Government and British Business Bank websites on 19 March 2020. We would advise you to seek specific advice and look for updates regularly.
- CBIL Scheme funding will be made available in the week commencing 23 March 2020 through existing finance providers, including the main banks and also asset based lenders.
- Facilities will be via loans, overdrafts, invoice finance / factoring or equipment finance / leases.
- Most SME businesses are eligible (turnover less than £41 million), but there are certain industries with restrictions including agriculture, some financial services, public services (including education) and religious / political organisations.
- Whilst the loans are repayable in full, the Government will provide the lender with a guarantee (of 80% on each loan), such that credit decisions are likely to be positive.
- Cash flow forecasts and up to date financial information will need to be provided in support of any application.
- Loans will be available up to £5million for periods up to 10 years (loans and equipment finance) and 3 years for overdrafts and invoice finance.
- Applications will need to show a sound borrowing proposal and “prove” the business’s medium / long term viability. It is not clear how long applications will take to process.
- Whilst not explicit, no arrangement fees appear to be chargeable. It is not clear what additional bank or administration charges may apply.
- Interest rates on these loans are to be “favourable” with the first 6 months interest free. Bank borrowing base rates are at an all time low (of 0.25%) so interest should not be penal and repayments could be phased over the period of the loan.
- Short term cash flow measures may also need to be considered, including agreeing Time to Pay arrangements with HMRC (PAYE / NIC, VAT and Corporation Tax), negotiations with suppliers and landlords over extended terms, and review of staff / employment rights and pay including SSP, and home working protocols.
- Grants to become available of up to £25,000 to support retail, hospitality and leisure businesses operating from smaller premises (rateable value less than £51,000).
If you would like more specific advice on financial options/ tax matters for your business at this difficult time. please get in touch with the Fairtax team. We’re here to help on 0333 577 1940, or email us confidentially at email@example.com