Government extends deadline for applications to Covid-19 finance schemes and relaxes ‘undertaking in difficulty’ rules

The Chancellor of the Exchequer Rishi Sunak recently announced plans to extend the deadline for new applications to 30 November 2020 for the following existing Covid-19 loan schemes:

• Coronavirus Business Interruption Loan Scheme (CBILS)
• Coronavirus Large Business Interruption Loan Scheme (CLBILS)
• The Bounce Back Loan Scheme (BBLS)
• Future Fund

The government has announced the term of BBLS loans will be extended from six years to 10 years and intends to also allow CBILS lenders to extend the term of a loan from six years to 10 years, providing additional flexibility to businesses.

For more information on the extension to the above schemes please click here.

Additionally, the British Business Bank (BBB) has recently announced that businesses applying for CBILS and CLBILS will benefit from greater flexibility as to whether their business is an ‘undertaking in difficulty’. To be eligible for CBILS and CLBILS, businesses previously had to demonstrate that they were not an ‘undertaking in difficulty’ (a test as defined under EU law), as of 31 December 2019. The new guidance allows for the assessment to be determined at the date of application for the schemes meaning that businesses that were ‘undertakings in difficulty’ on 31 December 2019 but are no longer, will now (in principle) be eligible for the schemes.

This gives businesses the option to restructure their finances e.g. by converting debt into equity, to become eligible for CBILS and CLBILS.

To view the BBB statement please click here.