Following the recent EU changes in State Aid Law relating to the ‘undertaking in difficulty’ test for businesses, the British Business Bank has amended its Coronavirus Business Interruption Loan Scheme.
Until this week an SME was classed as an ‘undertaking in difficulty’ if by deducting accumulated losses from its reserves it was left with a negative amount greater than half of its subscribed share capital, as at December 2019. Any SME classified in this way was barred from accessing CBILS, although SMEs less than three years old were exempt from this rule. The rule was untenable as it left many good businesses, which regular banks would usually have helped based on their own lending criteria, unable to access much-needed funds.
The amendment means that smaller businesses with fewer than 50 employees and less than £9,000,000 in annual turnover and/or annual balance sheet will not be considered undertakings in difficulty unless they are (a) subject to collective insolvency procedure under national law, or (b) in receipt of rescue aid (which has not been repaid) or restructuring aid (and are still subject to a restructuring plan).
Smaller businesses with more than 50 employees or more than £9,000,000 in annual turnover and/or annual balance sheet will still be subject to the ‘Undertaking in Difficulty’ test as defined by the European Union.
Applicants will need to determine their turnover and number of employees in line with Commission Recommendation 2003 concerning the definition of micro, small and medium-sized enterprises.
This change took effect from 30th July 2020, and means lenders may now be able to offer CBILS to businesses who had previously been unable to access it.
Another option is the Bounce Back Loan. Bounce Back Loans are designed to help Britain’s Small and Medium Enterprise’s (SMEs) get through the current government-imposed restrictions on business, and give them the resources to ‘bounce back’ quickly now that trading is permitted to resume.
If you wish to apply for the “Bounce Back Loan” you will need to speak with your bank to begin the process. Providers are mainly only accepting (or prioritising) existing customers first. Check out our other Nordens article on the Bounce Back Loan Scheme to find a full list of bank providers, as well as their application forms HERE.
Should you need assistance with determining your turnover or you would like more information on how to attain these loans, contact our expert team strategic team on 02085300720 or email businessdevelopment@nordens.co.uk
