COVID-19 – Business Support – Changes Made To Coronavirus Business Interruption Loan Scheme – Is It Too Little, Too Late?
The Chancellor, Rishi Sunak, has announced that changes will be made to Coronavirus Business Interruption Loan Scheme (CBILS) from today to boost the support to businesses affected by COVID-19.
This is set against a backdrop of a growing sense of frustration at the stance being taken by the lenders that has made CBILS virtually redundant and not fit for purpose.
At a time when an estimated 20% of all small businesses will run out of cash before the end of April, it is a damning indictment that The Treasury’s own figures show that of the 130,000 enquiries to date only 983 have been approved.
A couple of welcome changes are that CBILS has been extended to all viable small businesses affected by COVID-19, rather than just those unable to secure regular commercial financing, and the government is formally stopping lenders from requesting personal guarantees for loans under £250,000.
In addition, the government is promising that they will be “making operational changes to speed up lending approvals”.
Whilst the government has reiterated that they will continue to cover the first twelve months of interest and fees, there is no directive to the lenders on the level of interest to be applied after this period.
From the discussions that we have had with clients, this is a major concern that is deterring businesses from approaching the lenders.
A new Coronavirus Large Business Interruption Loan Scheme has been implemented to open government-backed support to businesses with an annual turnover of between £45 million and £500 million. The scheme will be on the same basis as CBILS with banks able to make loans of up to £25 million.
In an encouraging sign, Sir Howard Davies, the Chairman of the Royal Bank of Scotland, acknowledged there had been problems with the initial version of CBILS but expects the changes to deliver a “sharp increase” in lending to small firms in the next few days.
However, in the final analysis, the end result of pursuing funding under CBILS will be to introduce debt into your business. There are other alternatives to consider.
For a myriad of reasons, hundreds of thousands of businesses are not engaging with the R&D Tax Credit process even though qualifying activities are being undertaken.
If there was ever a time to think again, it is now. A business can make a claim on activity in the last two financial years and the process is quick, simple and painless.
Similarly, on Monday you will be able to submit your 2019-20 Self-Assessment Tax Return through the HMRC portal. If you are entitled to a rebate, HMRC usually process the payment in days.
If you have any questions or would like any further information, please either email email@example.com or book an appointment at https://calendly.com/jonathan-cooper/covid-19-support.