August 07, 2020

Some Undertakings in Difficulty to Benefit from the CBILS

More small businesses are set to benefit from the Coronavirus Business Interruption Loan Scheme (CBILS) after UK Government and industry lobbying led to recent changes to state aid rules.

CBILS eligibility

Prior to the announcement on 30th July 2020, companies that were deemed "undertakings in difficulty" could not access funding through the CBILS due to EU rules.

Now, undertakings in difficulty with less than 50 employees and a turnover of under £9 million can apply for a CBILS loan. Accredited lenders have received communication from the Economic Secretary to the Treasury and the Small Business Minister notifying them of the changes to ensure more SMEs can receive vital funding.

So far, businesses in the UK have benefitted from £50 billion of government-backed support. More than 57,000 companies have utilised the CBILS, in addition to other measures such as the furlough scheme, tax deferrals, the Bounce Back Loan Scheme (BBLS) and cash grants. Undertakings in difficulty are already eligible for Bounce Back Loans subject to de minimis State Aid limits.

The BBLS is an initiative designed enable adversely affected small and medium-sized businesses to borrow between £2,000 and £50,000 during the coronavirus pandemic. The UK government has pledged to guarantee 100% of the loan, making it more accessible, and lenders are not permitted to take personal guarantees or recovery action over a borrower’s personal assets such as the borrowers main home or personal vehicle. 

 

What is an undertaking in difficulty?

Generally speaking, an undertaking in difficulty is a company with high debt levels and accumulated losses. HMRC will deem a company as being in difficulty if it meets the criteria for insolvency as set out in the Insolvency Act (1986). For example, if the value of the business' assets is less than the amount of its liabilities and the firm is unable to pay its debts when they are due.

Furthermore, "where more than seven years have passed since a company’s first commercial sale, it will also be regarded as being in difficulty if more than half of its subscribed share capital has disappeared as a result of accumulated losses." You can find out about businesses in difficulty at gov.co.uk.

 

What funding could my business eligible for?

If your business has been negatively affected by the COVID-19 pandemic and you require funding to stay operational during this time, there are lots of options out there. Depending on eligibility, you can apply for one of the government-backed support packages, such as the ones mentioned above. There are a number of other finance options to choose from too, such as bridging loans, invoice discount finance and business credit cards.

Find out what support your business could be eligible for by requesting a no-obligation quote.

(It won't affect your credit score). 

Get your quote

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Editorial team