Helping you prosper

Post-Budget changes to support schemes

Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan (BBL)

It has been confirmed these will come to an end on 31 March 2021. If you haven’t already benefitted, then time is running out – applications must be submitted by 31 March 2021.

For many businesses, the process of recovery begins here. We know that recovery periods often involve outlaying cash in advance of income being generated (buying stock, employing staff etc.) and that puts a squeeze on working capital. 

It’s as dangerous a time as any, particularly for those businesses who have suffered the most. So make sure that you take advantage of the support that is available to you and for any advice or help with the application then do get in touch.

Recovery Loan Scheme

The Chancellor has introduced a new scheme which goes live on 6 April 2021 and replaces CBILS and BBL. We are still awaiting for the small print being delivered but here’s a summary of how the new scheme compares to CBILS and BBL: 

 

CBILS

BBL   

Recovery Loan Scheme

Expected end date

6 April 2021

6 April 2021

31 December 2021

Lending Criteria

25% turnover

Twice wages costs

25% turnover or £50,000

 

TBC

Funding Availability

£50k to £5m

£2k to £50k

£25k to £10m

Security

  • No personal guarantee for loans less than £250k
  • Loans over £250,000 will attract a 20% personal guarantee but no ability for security to be taken over a personal residence.

X

  • No personal guarantee for loans less than £250k
  • Loans over £250,000 will attract a 20% personal guarantee but no ability for security to be taken over a personal residence.

Interest payments

First 12 months interest payments covered by the government

First 12 months interest payments covered by the government

No interest payment cover

Interest rate

Interest cap (14.99%)

Fixed at 2.5% per annum

No interest cap

Capital repayments

First 12 months  capital repayment holiday

First 12 months capital repayment holiday

No expected repayment holiday

Arrangement fees

Paid by the government

Paid by the government

Paid by the borrower

Repayment period

Term loans – 6 years

Invoice discounting – 3 years.

Up to 10 years. Pay as You Grow Scheme.

Term loans – 6 years

Invoice discounting – 3 years

Multiple lending

Multiple CBILS loans available but cannot mix CBILS and BBL

N/A

Can be offered alongside CBILS or BBL

Lending Type

Loans, ID facilities, asset backed, overdrafts

Fixed Loan

Currently vague in respect of asset backed lending

This table does not cover all areas, there are other less mainstream differences which may impact your decision and/or ability to secure a loan. Please talk to your adviser about the specifics of your situation and they will be able to direct you accordingly.

For the avoidance of doubt, as you can see from the above table, CBILS remains the superior product.

There are many unknowns at this time and we’ll keep you updated when more information flows through. We’re currently unsure which lenders will engage in this product and whether there will be any new entrants to the lending market. With the removal of the interest rate cap and government backed interest and arrangement fee payments, the Recovery Loan Scheme may be more expensive than CBILS.

The next step

At UHY we can trawl the market through our online platform and invite multiple lenders to tender for your business through one application process. So far we have helped raise millions in CBILS funding for our clients, so please if you have any questions or need any support, please contact Stuart Hutchison on 01462 687333, email s.hutchison@uhy-uk.com or contact your usual UHY adviser.

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