In last week’s Budget 2020, we welcomed the Chancellor’s wide-ranging measures to help UK businesses cope with the effects of Covid-19 in the form of the Coronavirus Business Interruption Loan Scheme.

Following the rapid escalation of the pandemic, the Chancellor has just announced an extension of the financial support that the Government is offering to businesses and individuals. Of these new measures, the most applicable for SMEs include:

• Extension of the Coronavirus Business Interruption Loan Scheme (CBILS) from £1.2m per business to £5.0m per business. These loans will be guaranteed by the Government and will require no interest payments for 12 months. In combination with a larger business scheme, a total of £330bn of guarantees will be available with more liquidity to be provided if required. There was no mention of the guarantee level increasing above the 80% level previously announced.
• Confirmation that the action taken by the Government to advise people to stay away from leisure and hospitality venues will count as an event for the purposes of insurance claims to be made by these businesses.
• A rates holiday for all businesses in the leisure, hospitality and retail sectors of 12 months with cash grants of £25,000 per business for those with a rateable value of less than £51,000.
• Cash grants of £3,000 for small business that pay business rates of less that £12,000 announced in Wednesday’s budget will be increased to £10,000 per business.

Of great concern to many business owners will be taking on loans with only partial guarantee cover at a time of great uncertainty. With only partial cover comes complexity as experienced with the Enterprise Finance Guarantee Scheme (EFG) when the lending institution is at risk, even partial risk, the process of accessing the funds can be challenging.

Understanding the risk profile of taking on a CBILS to support your business is essential. Our teams will be working hard to provide that advice and support in accessing the loans as more details are announced.

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