UK Government COVID-19 Funding Initiatives (as of 29 May, 2020) - Pillsbury ...
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UK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
Scheme Summary Eligibility How to access Additional details Official guidance
Coronavirus Under the scheme, small and medium The scheme is open to all UK-based CBILS is now open for applications via When first announced, the government https://www.gov.uk/guidance/apply-
Business sized businesses (SMEs) with an annual SMEs with an annual turnover of no the British Business Bank’s 40 advised that lenders that were able to for-the-coronavirus-business-
Interruption Loan turnover of up to GBP 45m that are more than GBP 45m and with a accredited lenders, who will then apply offer finance on normal commercial interruption-loan-scheme
Scheme (CBILS) experiencing cashflow disruptions due borrowing proposal which, were it not to the scheme. terms without the need to make use of
to coronavirus can access government- for the current pandemic, would be CBILS would be required do so. https://www.british-business-
backed financing of up to GBP 5m considered viable by the lender and for The list of accredited lenders has been bank.co.uk/ourpartners/coronavirus-
through a wide range of business which the lender believes the provision published here and all major banks are On 2 April, the government expanded business-interruption-loan-scheme-
finance products, including term loans, of finance will enable the business to offering the scheme. the scheme (with retroactive effect cbils/
overdrafts, invoice finance and asset trade out of any short-to-medium term from 23 March) such that businesses
finance. difficulty. On 27 April, the government In the first instance, businesses are are no longer required to establish a
announced that it would be changing encouraged to approach their existing lack or absence of security prior to
Key features: the viability test so that banks will lenders through their websites, and to financing for facilities above £250,000.
solely be required to assess whether a consider approaching other lenders on
• The maximum value of a facility business was viable prior to COVID-19. the list if they are unable to access the From Monday 6 April, the scope of the
provided under the scheme will be Companies applying to the scheme finance they need. scheme was widened to include
GBP 5m. must not have been classed as a businesses that meet the requirements
• Finance terms are up to six years for ‘business in difficulty’ on 31 December for a regular commercial facility,
term loans and asset finance 2019 if applying to borrow GBP 30,000 significantly increasing the number of
facilities. For overdrafts and invoice or more. businesses eligible for the scheme.
finance facilities, terms will be up to
three years. Decision-making on eligibility for CBILS On 1 May, it was announced that the
• Lender is provided with a is fully delegated to the relevant government’s guarantee against 80%
government-backed guarantee accredited lenders. of the outstanding facility balance
against 80% of the outstanding would no longer be subject to an
facility balance. The following trades and organisations overall cap per lender and that further
• Lenders will pay a fee to access the are not eligible to apply: banks, education establishments were now
scheme, with no guarantee fee being building societies, insurers and eligible for the scheme.
charged to the borrower. reinsurers (but not insurance brokers);
• The government will pay the first 12 public sector bodies; and state-funded Lenders are not permitted to request
months of interest payments and primary and secondary schools. personal guarantees for loans under
any lender-levied fees (Business £250,000. Personal guarantees may be
Interruption Payment). Fishery, aquaculture and agriculture requested for loans over £250,000 (at
businesses may not qualify for the full the lender’s discretion) but recoveries
The scheme may be used at the Business Interruption Payment by the under these guarantees are capped at
lender’s discretion for unsecured government. 20% of the outstanding balance under
facilities of any value. the CBILS facility after the proceeds of
the business assets have been applied.
The borrower always remains 100% In addition, a Principal Private
liable for the debt. Residence cannot be taken as security
to support a personal guarantee or as
security for a CBILS-backed facility.
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
Business Rates Under the scheme, businesses Properties based in England1 that that Local authorities will apply the business The Brexit Withdrawal Agreement https://www.gov.uk/guidance/check-
Holiday for operating in the retail, hospitality or are wholly or mainly being used as: rates holiday directly to eligible negotiated with the EU provides that if-your-retail-hospitality-or-leisure-
Retail, leisure sector in England will not have shops, restaurants, cafes, drinking businesses’ rates bills for the 2020-21 during a transition period EU State aid business-is-eligible-for-business-rates-
Hospitality and to pay business rates for the 2020-21 establishments, cinemas and live music tax year. rules would continue to apply. relief-due-to-coronavirus-covid-19
Leisure tax year. venues; for assembly and leisure(e.g.
sports clubs, gyms or spas); or Businesses that received the retail Following discussions with the https://assets.publishing.service.gov.uk
There will be no rateable value limit on as hotels, guest and boarding premises discount in the 2019 to 2020 tax year European Commission, the UK /government/uploads/system/uploads
the relief. and self-catering accommodation, will will be rebilled by their local authority government is satisfied that this relief /attachment_data/file/873622/Expand
be eligible for the relief. as soon as possible. is not a state aid and has instructed ed_Retail_Discount_Guidance.pdf
Local Authorities to award the relief to
The government has published detailed all eligible properties.
guidance on which types of businesses
will be eligible for the relief here.
Cash Grant for Under the scheme, businesses Businesses will be eligible if they are Local Authorities will write to all Any enquiries on eligibility for, or https://www.gov.uk/guidance/check-
Retail, operating in the retail, hospitality or based in England 1, operating eligible businesses with information on provision of, the grant should be if-youre-eligible-for-the-coronavirus-
Hospitality and leisure sector will receive a cash grant in the retail, hospitality and/or leisure how to claim this grant. directed to the relevant Local retail-hospitality-and-leisure-grant-
Leisure of up to GBP 25,000 per property. sector and occupying properties that Authority. fund
are wholly or mainly being used as:
Businesses in these sectors with a shops, restaurants, cafes, drinking The grants are required to comply with https://assets.publishing.service.gov.uk
property that has a rateable value of establishments, cinemas and live music European Commision’s Temporary /government/uploads/system/uploads
under GBP 15,000 will receive a grant venues; for assembly and leisure; or as Framework on State Aid, adopted on /attachment_data/file/882809/small-
of GBP 10,000, while businesses with a hotels, guest and boarding premises 19 March 2020. business-grant-and-retail-leisure-
property that has a rateable value of and self-catering accommodation. hospitality-grant-guidance-for-
between GBP 15,001 and GBP 51,000 Grants under the scheme are subject to businesses.pdf
will receive a grant of GBP 25,000. Businesses with a property that has a tax, provided the business has made a
rateable value of GBP 51,000 or over profit once grant income is included.
are not eligible for this scheme.
Businesses which are not ratepayers in
the business rates system, or which
were liquidated or dissolved as at 11
March are not included in this scheme.
Eligible business can receive one grant
per property and businesses cannot
claim both the small business grant and
the retail, hospitality and leisure grant
on the same property.
Coronavirus Job Under the scheme, all UK employers All UK employers with a PAYE scheme Employers will first need to officially Changing the status of employees to https://www.gov.uk/guidance/claim-
Retention with a PAYE scheme will be able to will be eligible – this includes the public designate affected employees as ‘furloughed workers’ remains subject for-wage-costs-through-the-
Scheme (CJRS) access funding, in the form of a sector, Local Authorities and charities. ‘furloughed workers,’ and notify to existing employment law and, coronavirus-job-retention-scheme
government grant, to continue paying employees of this change. depending on the employment
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
part of their employees’ salary for Agency workers, company directors, contract, may be subject to https://www.gov.uk/guidance/check-
those employees that would otherwise salaried members of LLPs, office On 20 April 2020, HMRC launched its negotiation. if-you-could-be-covered-by-the-
have been laid off during this crisis. holders, Limb (b) workers and online service to enable employers (or coronavirus-job-retention-scheme
This is to safeguard workers from being contractors with public sector authorised agents claiming on their Employees that have been furloughed
made redundant. engagements in scope of IR35 off- behalf) to submit information about have the same rights as they did https://www.gov.uk/guidance/claim-
payroll working rules may also be furloughed employees and their previously. That includes Statutory Sick for-wages-through-the-coronavirus-
Until the end of July 2020, the eligible for the scheme in certain earnings, make a claim and receive Pay entitlement, maternity rights, job-retention-scheme
government grants will cover 80% of circumstances. payments. The online portal can be other parental rights, rights against
the salary (up to a cap of GBP 2,500 accessed here. unfair dismissal and to redundancy https://assets.publishing.service.gov.uk
per month) of “furloughed” workers, Employers (in the public or private payments. /government/uploads/system/uploads
i.e. employees who are kept on their sector) receiving public funding for Prior to using the online service, /attachment_data/file/880099/Corona
employer’s payroll but not required to staff costs are not expected to furlough employers will need to calculate how Furloughed employees can be on any virus_Job_Retention_Scheme_step_by
work. The grants will also cover the their employees if they are continuing much they can claim, either by type of employment contract, including _step_guide_for_employers.pdf
associated National Insurance to receive such funding. obtaining professional advice or by agency contracts and flexible or zero-
contributions (NICs) and minimum using the government’s online hour contracts. https://www.gov.uk/government/news
employer pension contributions for the The latest date on which an employee calculator (which can be accessed /chancellor-extends-furlough-scheme-
furloughed employees. Employers can must have been employed to qualify here). Apprentices can also be furloughed and until-october
top up salaries further if they choose for the scheme is 19 March 2020. are permitted to continue their training
to, but this is not obligatory under the After a claim has been made through during furlough.
scheme. Employers must have created a PAYE the system, employers will be provided
payroll scheme on or before 19 March with a claim reference number. HMRC Non-employees such as company
From August 2020, government relief 2020 and have a UK bank account. will then verify the claim and pay the directors and salaried members of
will gradually be tapered as follows: claim amount via BACS within six limited liability partnerships may also
• From August, employers will be Employees will need to be officially working days. be eligible under the scheme.
required to resume paying for designated as “furloughed”, i.e.
furloughed employees’ NICs and employees who have been asked to Companies claiming under the scheme The scheme also covers employees
pension contributions. stop working, but who are being kept must keep records relating to their who were made redundant since 28
• From September, the government on the payroll. claims for at least 6 years. February 2020, if they are rehired by
will pay 70% of wages up to a cap of their employer.
GBP 2,187.50. Employers will pay Any employees placed on furlough
NICs and pension contributions and must be furloughed for a minimum of To be eligible, a furloughed employee
10% of wages to make up 80% total three consecutive weeks. When they may not undertake any work on behalf
up to a cap of GBP 2,500. return to work, they must be taken off of the organisation, with employees
• From October, the government will furlough. Although an employee may working reduced hours not eligible for
pay 60% of wages up to a cap of GBP be furloughed multiple times, each the scheme. On 29 May, the
1,875. Employers will pay NICs and separate instance must be for a government announced that, from July
pension contributions and 20% of minimum of three consecutive weeks. 2020, furloughed workers will be able
wages to make up 80% total up to a to return to work part-time.
cap of GBP 2,500.
On 24 April, the government
CJRS was initially intended to run for 4 announced that furloughed workers
months, backdated from 1 March 2020 intending to take paid parental or
until the end of June. On 12 May, the adoption leave will be entitled to
government announced that the Statutory Maternity Pay, as well as
scheme would be extended by other forms of Parental or Adoption
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
another 4 months to run until the end Pay, based on their usual earnings
of October. rather than a furloughed pay rate.
There is no limit to the amount of On 12 May, the government
government funding available under announced that the scheme would be
the scheme. extended until the end of October
2020, having originally been due to
close at the end of June 2020.
On 29 May, the government
announced various changes to the
CJRS, with further guidance set to be
published on 12 June:
• From 1 July, employers can bring
back to work employees that
have previously been furloughed
for any amount of time and any
shift pattern, while still being
able to claim CJRS grant for their
normal hours not worked.
• The CJRS will close to new
entrants from 30 June. From this
point onwards, employers will
only be able to furlough
employees that they have
furloughed for a full 3 week
period prior to 30 June.
• From August 2020, the level of
government grant provided
through the CJRS will be slowly
tapered away.
Small Business The scheme will provide a one-off grant The grant will be available to Local Authorities will write to all Any enquiries on eligibility for, or https://www.gov.uk/guidance/check-
Grant Funding of GBP 10,000 to small businesses that businesses based in England1 that were eligible businesses with information on provision of, the grant should be if-youre-eligible-for-the-coronavirus-
already pay little or no business rates already receiving SBRR, RRR and/or TR how to claim the grant. directed to the relevant Local small-business-grant-fund
because of small business rate relief as of 11 March 2020 and which occupy Authority.
(SBRR), rural rate relief (RRR) and property. https://assets.publishing.service.gov.uk
tapered relief (TR), to help meet their The grants are required to comply with /government/uploads/system/uploads
ongoing business costs. Eligible business can receive one grant European Commision’s Temporary /attachment_data/file/882809/small-
per property and businesses cannot Framework on State Aid, adopted on business-grant-and-retail-leisure-
Scheme funding is expected to be claim both the small business grant and 19 March 2020. hospitality-grant-guidance-for-
available from 1 April the retail, hospitality and leisure grant businesses.pdf
2020. on the same property. Grants under the scheme are subject to
tax, provided the business has made a
profit once grant income is included.
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
Statutory Sick Under the scheme, SMEs will be able to All UK based businesses with a PAYE Employers can make claims through a The government advises that https://www.gov.uk/guidance/claim-
Pay (SSP) Rebate reclaim SSP (set at GBP 94.25 per payroll scheme and employing fewer new online service that launched on 26 employers should maintain records of back-statutory-sick-pay-paid-to-
employee per week before 6 April 2020 than 250 employees as of 28 February May 2020. staff absences and payments of SSP, employees-due-to-coronavirus-covid-
and currently set at GBP 95.85) paid for 2020 will be able to reclaim but that employees will not need to 19
staff sickness absence due to expenditure for any employee who is In order to prepare to make a claim, provide a GP fit note.
coronavirus. unable to work due to: employers should keep records of all
• having coronavirus symptoms; the SSP payments that they wish to If evidence is required by an employer,
This refund will cover up to 2 weeks’ • self-isolating and being unable to claim from HMRC. employees with symptoms of
SSP per eligible employee who has work from home; coronavirus can request an isolation
been off work because of coronavirus. • shielding following advice that HMRC advises that employers should note from NHS 111 online and those
they are at high risk of severe receive payments within six working who live with someone that has
The government is currently legislating illness from coronavirus; or days after submitting their application. symptoms can request a note from the
for SSP to be paid from day 1 of • receiving a notification from the NHS website.
absence from work and this will apply NHS that they have come into
retrospectively from: contact with someone with Claims under the scheme are required
• 13 March 2020 for employees coronavirus. to comply with European Commision’s
who had coronavirus or the Temporary Framework on State Aid,
symptoms or were self-isolating The scheme covers all types of adopted on 19 March 2020.
because they live with someone employment contracts including full-
with symptoms; time and part-time employees,
• 16 April 2020 for employees that employees on agency contracts and
were shielding because of employees on flexible or zero-hour
coronavirus; or contracts.
• 28 May 2020 for employees that
have been notified by the NHS
that they’ve come into contact
with someone with coronavirus.
Time to Pay (TTP) HMRC is dedicating additional All UK tax-paying businesses and self- HMRC has set up a dedicated helpline Applicants applying for TTP should be https://www.gov.uk/government/news
resources to its existing TTP scheme, employed people in financial distress, for dealing with coronavirus-related prepared to have a detailed /tax-helpline-to-support-businesses-
which allows entities in financial and with outstanding tax liabilities, may TTP enquiries which can be accessed by conversation with HMRC regarding affected-by-coronavirus-covid-19
distress to defer current tax liabilities be eligible for TTP but arrangements calling 0800 024 1222 between 8am their specific circumstances, financial
into future instalments. are agreed on a case-by-case basis and and 4pm on Monday to Friday. situation and what measures are being https://www.gov.uk/difficulties-
are tailored to individual circumstances taken to get tax payments in order. paying-hmrc
HMRC has announced that up to 2,000 and liabilities.
call handlers are being made available If, following discussion, HMRC believes
to support businesses and individuals that applicants can pay immediately
in need and has set up a dedicated they will be required to do so.
helpline for dealing for coronavirus-
related TTP enquiries. If HMRC offers extra time to pay, they
will set up a plan to pay instalments by
Direct Debits on mutually agreed dates.
Covid-19 Under the scheme, the Bank of The scheme is open to non-financial CCFF is now available for applications. Companies that do not have a public https://www.gov.uk/guidance/apply-
Corporate England will assist larger companies to (i.e. not PRA or FCA regulated), UK- investment grade rating may consider for-the-covid-19-corporate-financing-
bridge coronavirus disruption to their incorporated firms (including those two options: facility
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
Financing Facility cash flows through the purchase of with foreign-incorporated parents) that In order to access the facility,
(CCFF) short-term debt in the form of make a material contribution to the UK companies should in the first instance 1. The Bank of England will accept https://www.bankofengland.co.uk/ne
commercial paper. economy and can demonstrate that liaise with their banks. banks’ internal ratings of ws/2020/march/the-covid-corporate-
they were in sound financial health corporates to assess credit status. financing-facility
The facility will offer financing on prior to the impact of coronavirus. For those companies whose banks do Firms will ordinarily be required to
terms comparable to those prevailing not issue commercial paper, a list of have at least three investment
in markets before the crisis. In practice, this means those banks that are able to assist has been grade bank ratings and no
companies that had a short or long- published here. speculative grade bank ratings as
The scheme will operate for a term rating of investment grade (e.g. a at 1 March 2020.
minimum of 12 months and for as long credit rating of A-3 / P-3 / F-3 / R3 from 2. Firms may also get in touch with
as required to relieve cash flow at least one of Standard & Poor’s, one of the major credit rating
pressures on firms that make a Moody’s, Fitch and DBRS Morningstar), agencies to seek an assessment of
material contribution to the UK as at 1 March 2020, or equivalent. credit quality for the purpose of
economy. accessing the CCFF.
Companies who wish to use the
scheme do not need to have issued On 19 May 2020, the government
commercial paper before. announced that issuers participating in
the CCFF will be required to provide a
letter of commitment, restricting their
capital distributions and senior pay
(including cash bonuses), if:
• an increase in an issuer's CCFF
limit, over and above that
suggested by the issuer’s
investment rating, is requested
and approved; and/or
• a CCFF transaction is entered
which involves commercial paper
maturing on or after 19 May
2021.
A template letter of commitment has
been published here.
Business Rates Under the scheme, nurseries in Properties registered on Ofsted’s Early Local authorities will apply the business The Brexit Withdrawal Agreement https://www.gov.uk/guidance/check-
Holiday for England1 will not have to pay business Years Register and which are wholly or rates holiday directly to eligible negotiated with the EU provides that if-your-nursery-is-eligible-for-business-
Nurseries rates for the 2020-21 tax year. mainly used for the provision of the nurseries’ business rates bills for the during a transition period EU State aid rates-relief-due-to-coronavirus-covid-
Early Years Foundation Stage will be 2020-21 tax year. rules would continue to apply. 19
eligible for the relief.
Following discussions with the https://assets.publishing.service.gov.uk
European Commission, the UK /government/uploads/system/uploads
government is satisfied that this relief /attachment_data/file/877772/Nursery
is not a state aid and has instructed _discount_guidance_April_2020.pdf
Local Authorities to award the relief to
all eligible properties.
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
Value Added Tax Under the scheme, VAT payments will All VAT-registered UK businesses are This is an automatic offer and no VAT returns will still need to be https://www.gov.uk/guidance/deferral
(VAT) Deferral be deferred for a period of three eligible. application is required. submitted to HMRC on time. -of-vat-payments-due-to-coronavirus-
months between 20 March 2020 and covid-19
30 June 2020. The government advises that VAT refunds and reclaims will be paid
customers who normally pay VAT by by the government as normal during
VAT registered businesses will not need direct debit should cancel their direct the deferral period.
to make a VAT payment during this debit with their bank in sufficient time
period and will be given until the end so that HMRC do not attempt to
of the 2020-2021 tax year to pay any automatically collect on receipt of the
liabilities accumulated during the customer’s VAT return.
deferral period.
Income Tax Under the scheme, income tax All self-employed persons are eligible. This is an automatic offer and no The deferral is optional and HMRC has https://www.gov.uk/pay-self-
Deferral for the payments due on 31 July 2020 under application is required. recommended that taxpayers who are assessment-tax-bill
Self-Employed the Self-Assessment system may be able to make their payment on account
deferred to 31 January 2021. should do so.
No penalties or interest for late
payment will be charged in the deferral
period.
Self-Employment From 13 May to 13 July 2020, self- To be eligible for the SEISS, applicants The SEISS opened for applications for The grant will be subject to Income Tax https://www.gov.uk/guidance/claim-a-
Income Support employed people or members of a must: the first grant on 13 May 2020. and National Insurance contributions grant-through-the-coronavirus-covid-
Scheme (SEISS) partnership are able to claim a taxable but does not need to be repaid. 19-self-employment-income-support-
grant worth 80% of the average • have traded in the tax year 2018-19 HMRC assigned eligible individuals with scheme
monthly trading profits for the and submitted a Self-Assessment tax a specific date to make an application Those receiving the grant can continue
previous three tax years, up to a return for that year by 23 April 2020; using their Unique Tax Reference to work or take on other employment
maximum of GBP 2,500 per month • have traded in the 2019-20 tax year; number (UTR). This can be checked on including voluntary work.
(and capped at a total of GBP 7,500). • intend to continue to trade in the the HMRC online checker which can be
2020-21 tax year; accessed here. Individuals will not be On 29 May, the government
In August 2020, applicants will be able • be trading at the time of application able to make a claim prior to their announced that the SEISS was being
to claim for a second and final taxable (or would have if not for COVID-19); assigned claim date, but can make a extended, with a second grant being
grant worth 70 % of their average and claim after that day and up until 13 July made available in August 2020. The
monthly trading profits, paid out in a • be carrying on a trade which has 2020. eligibility criteria are the same for both
single instalment covering a further 3 been adversely affected by COVID- grants and an individual does not need
months’ worth of profits, and capped 19. Once a claim is approved, applicants to have claimed the first grant to
at GBP 6,570 in total. will receive their payment within six receive the second grant. Further
Self-employed trading profits must be working days of completing the claim. guidance on the second grant will be
less than GBP 50,000, and self- published on 12 June.
employment must comprise more than Individuals must claim themselves and
half of income. not via a tax agent or adviser, as this
will trigger a fraud alert and cause a
The government has launched an significant delay to receiving payment.
online tool here for potential applicants
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
to check whether they are eligible for Applications for the second grant will
the scheme. be opened in August 2020 and further
guidance will be provided to applicants
in due course.
Protection from Commercial tenants who cannot pay All commercial tenants in England, No action is required. This is not a rental holiday. All https://www.gov.uk/government/news
Eviction for their rent because of COVID-19 will be Wales and Northern Ireland are commercial tenants will still be liable /extra-protection-for-businesses-with-
Commercial protected from eviction. eligible. for the rent. ban-on-evictions-for-commercial-
Tenants tenants-who-miss-rent-payments
These measures mean no business will The government is also considering the
automatically forfeit their lease and be impact on commercial landlords and is
forced out of their premises if they due to build in support for them too.
miss a payment up until 30 June 2020.
There is the option for the government
to extend this period if needed.
Companies UK companies can now apply to Companies are required to make an An application to extend the deadline The changes to the strike-off policy and https://www.gov.uk/guidance/apply-
House Support Companies House for a 3-month application for the extension but those for filing the accounts can be made late filing penalties will be reviewed by for-more-time-to-file-your-companys-
extension for filing their accounts if citing an issue related to COVID-19 will here. the government from 1 June 2020 and accounts
their business has been affected by be granted an automatic extension. guidance will be updated according to
COVID-19. the situation at that time. https://www.gov.uk/guidance/coronav
For companies who apply for voluntary irus-guidance-for-companies-house-
On 16 April, Companies House dissolution, the striking off application customers-employees-and-suppliers
announced a temporary pause of the will be registered at Companies House
striking off process to provide affected and a notice will be published in the
businesses with additional time to Gazette. After this point, any further
update their records and avoid being action to strike off the company will be
struck off the register. suspended.
These changes do not apply to
businesses being dissolved as a result
of an insolvency procedure (e.g.
liquidation).
Changes to The UK Government has announced The legislation to give effect to these https://www.gov.uk/government/news
Insolvency Laws planned changes to its existing announced changes is set out in the /government-introduces-legislation-to-
insolvency framework to support Corporate Governance and Insolvency relieve-burden-on-businesses-and-
companies during the coronavirus Bill, which was presented to Parliament support-economic-recovery
crisis. on 20 May. The exact timing and
applicability of these changes is yet to
These measures include: be finalised.
©2020 Pillsbury Winthrop Shaw Pittman LLP | pillsburylaw.comUK Government COVID-19 Funding Initiatives (as of 29 May, 2020)
• introducing a new moratorium to
give companies breathing space
from their creditors whilst they seek
a rescue;
• ensuring companies going through a
rescue process continue to receive
supplies by prohibiting the use of
termination clauses by suppliers,
subject to safeguards for suppliers
facing hardship and a temporary
exemption for small firms during the
coronavirus emergency;
• introducing a new restructuring plan
that will bind creditors to it;
• temporarily removing the threat of
personal liability for ‘wrongful
trading’ (under the 1986 Insolvency
Act) from directors who try to keep
their companies afloat through the
emergency;
• temporarily prohibiting creditors
from filing statutory demands and
winding-up petitions for coronavirus
related debts;
• temporarily easing burdens on
businesses by enabling them to hold
closed AGMs, conduct business and
communicate with members
electronically, and by extending
filing deadlines; and
• allowing for the temporary measures
to be retrospective from their
respective dates of announcement
so as to provide as much relief to
business as possible.
Coronavirus Under this scheme, large businesses To be eligible for the scheme the The CLBILS is now open for applications Lenders are not permitted to request https://www.gov.uk/guidance/apply-
Large Business will be able to access government- business must: via the British Business Bank’s personal guarantees for loans under for-the-coronavirus-large-business-
Interruption Loan backed bank loans of up to GBP 200m • be UK based; accredited lenders, who will then apply £250,000. Personal guarantees may be interruption-loan-scheme
Scheme (CLBILS) (increased on 26 May 2020 from the • have an annual turnover of more to the scheme. requested for loans over £250,000 (at
previously announced limits of GBP than GBP45m; the lender’s discretion) but recoveries https://www.british-business-
25m for businesses with turnover up to • have a borrowing proposal which The list of 12 accredited lenders has under these guarantees are capped at bank.co.uk/ourpartners/coronavirus-
GBP 250m and GBP 50m for businesses the lender would (i) consider been published here and most major 20% of losses after all other recoveries business-interruption-loan-
with higher turnover). viable, if not for COVID-19, and (ii) banks are offering the scheme. Term have been applied. schemes/clbils/clbils-for-businesses-
believe will enable the business to loans and revolving credit facilities over and-advisors/
GBP 50m will be offered by approved
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The maximum amount able to be trade out of any short to medium- lenders that have secured additional On 16 April 2020, the government
borrowed by a firm under the scheme term difficulty; accreditation, listed here. announced that the scheme would
is the higher of (i) double the annual • self-certify that it has been expand to all viable businesses with a
wage bill in respect of UK business of adversely impacted by the In the first instance, businesses are turnover of more than GBP 45m, and
the borrower; (ii) 25% of the turnover coronavirus; and encouraged to approach accredited that businesses with a turnover of
of the borrower’s UK business in 2019; • not have received a facility under lenders through their websites, and to more than GBP 250m can borrow up to
or (iii) an amount to cover the liquidity the COVID-19 Corporate consider approaching other lenders on GBP 50m. Businesses with a turnover
needs of the borrower’s UK business Financing Facility (CCFF), the the list if they are unable to access the of more than GBP 500m had originally
for 12 months, as justified and self- Coronavirus Business Interruption finance they need. not been eligible for the scheme.
certified by the borrower. Loan Scheme (CBILS) or Bounce
Back Loan Scheme (BBLS). On 4 May 2020, the government
The scheme is targeted at businesses announced that further education
that were viable prior to COVID-19 but The scheme is open to businesses from establishements would now be eligible
which are now facing significant cash any sector except credit insititutions, for the scheme.
flow difficulties that are affecting their building societies, insurers and
short-term viability. reinsurers (but not insurance brokers), On 19 May 2020, the government
public sector bodies and state-funded announced that from 26 May, the
Businesses will be able to access primary and secondary schools. maximum loan size available under the
financial products such as short term CBILS would increase from GBP 50m to
loans, revolving credit facilities 200m, to enable larger firms that did
(including overdrafts), invoice finance not previously qualify for the Covid
and asset finance, on terms of up to Corporate Finance Facility to be better
three years. able to access enough finance to meet
their cashflow needs during the
Lenders will be provided with a pandemic. The maximum size for
government-backed guarantee against invoice finance and asset finance
80% of the outstanding facility balance. facilities remains at GBP 50m.
The borrower always remains 100% Any business borrowing in excess of
liable for the debt. GBP 50m through the scheme are
subject to a number of restrictions,
which include:
• declaring, making or paying any
dividend, charge, fee or other
distribution;
• repaying or distributing any
dividend or share premium
reserve;
• paying or allowing any group
company to pay any
management, advisory or other
fee to shareholders or partners;
• redeeming, repurchasing,
defeasing, retiring or repaying
any of its share capital or
resolving to do; or
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• paying cash bonuses or awarding
pay rises to senior management
(unless agreed in writing prior to
taking out the facility).
Future Fund Under this scheme, innovative To be eligible for the scheme the The Future Fund scheme opened for www.uk-futurefund.co.uk
companies that are facing financial business must: applications on 20 May 2020 and is The maximum term of the loan is 36
difficulties due to COVID-19 will be able • be registered in the UK and be expected to run until the end of months and cannot be repaid early www.gov.uk/guidance/future-fund
to access convertible loans between unlisted; September 2020. other than with the agreement of all of
GBP 125,000 and GBP 5m, subject to at • have been incorporated on or the investors. www.british-business-
least equal matched funding from third before 31 December 2019; The application process is investor-led; bank.co.uk/ourpartners/coronavirus-
party private investors. • be able to attract the equivalent an investor (or a lead investor of a The bridge funding shall automatically business-interruption-loan-
match funding from third-party group of investors) must apply in convert into equity on the company’s schemes/future-fund
The government loan shall make up no private investors and institutions; connection with an eligible company. next qualifying funding round at a
more than 50% of the bridge funding • have previously raised at least The company must then confirm the minimum conversion discount of 20%
provided to the company and the GBP 250,000 in aggregate from accuracy of the investment application (or higher, if a higher rate has been
remaining amount must be matched by private third party investors details before submitting the full aggreed between the company and the
private investor(s). Notwithstanding during the last five years; and application. If the application is matched investor(s)) to the price set by
the GBP 5m cap on government loans • meet at least one of the following approved, all parties will execute a that funding round.
provided under the scheme, there is no conditions: convertible loan agreement (template
cap on the amount that a matched o half or more employees published here) and satisfy the There will be a company repayment
private investor may loan to the are UK based; or conditions set out in the agreement right in respect of the accrued interest.
company, meaning that there is no cap o half or more revenues are before the funds are released. A minimum interest rate of 8% per
on the aggregate bridge funding from UK sales. annum (non-compounded) will be
provided to the company. charged on loans under the scheme, to
If the business is a member of a be repaid on maturity of the loan, at
The government is committing an corporate group, only the ultimate which point it will either be repaid or
initial GBP 250m towards the scheme, parent company (if UK registered) will convert to equity.
but this amount will be kept under be eligible to receive the loan.
review. The bridge funding must be used solely
An eligibility checker has been for working capital and may not be
published here. used by the company to:
• Repay any borrowings from a
The investor(s) must fall within any of shareholder or a shareholder
the following categories: related party (other than the
• an “investment professional” (as repayment of any borrowings
defined in Article 19 of the pursuant to any bank or venture
Financial Services and Markets debt facilities);
Act 2000 (Financial Promotion) • Pay any dividends or other
Order 2005 (“FPO”); distributions;
• a high net worth company, • For a period of twelve months
unincorporated associated or from the date of the relevant
high value trust falling with in convertible loan agreement,
Article 49(2) of the FPO; make any bonus or other
• a “certified sophisticated discretionary payment to any
investor” or a “self-certified employee, consultant or director
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sophisticated investor” as defined of the company other than as
in Articles 50 and 50A of the FPO; contracted prior to the date
• a “certified high net worth hereof and as paid by the
individual” as defined in Article Company in the ordinary course
48 of the FPO; of business; or
• an equivalent professiona, high • Pay any advisory or placement
net worth, institutional or fees or bonuses to any corporate
sophisticated investor in finance entity or investment bank
accordance with applicable law or similar service provider on
and regulation in such investor’s monies advanced by the Future
home jurisdiction ; Fund.
• an association of high net worth
or sophisticated investors as
defined in Article 51 of the FPO;
or
• capable of being classified as a
“professional client” as defined in
the glossary to the FCA Handbook
of Rules and Guidance.
Innovate UK Innovate UK, the national innovation These measures are targeted towards: A questionnaire has been published by The continuity grants and loans https://www.gov.uk/government/news
Grants and Loans agency, has announced that it will: • SMEs currently receiving support Innovate UK here which will help guide available under the scheme must be /billion-pound-support-package-for-
• offer up to GBP 90m in continuity from Innovate UK; prospective applicants, based on their applied to specific outstanding costs innovative-firms-hit-by-coronavirus
grants between GBP 25,000 and • Innovate UK Entreprise Europe specific circumstances, to the most relating to a live project, which have
GBP 250,000 and up to GBP 210m Network (EEN) and Growth suitable funding option and not already been covered through the https://www.gov.uk/apply-funding-
in continuity loans between GBP Adviser clients and high growth appropriate application form. existing Innovate UK award. innovation
250,000 and GBP 1.6m, to SMEs SMEs in receipt H2020 and EIC
and third sector organisations funding; Applicants are advised to carefully Continuity grants will be paid in full, https://assets.publishing.service.gov.uk
that are at risk of abandoning • Innovate UK EEN SME growth consider their business needs before with no requirement for matched /government/uploads/system/uploads
projects due to a shortage of clients; and applying as awards will only be made funding from the recipient. 90% of the /attachment_data/file/885671/Innovat
funds directly related to COVID- • new high growth potential clients where such needs are established and grant will be paid in advance, with the e_UK_coronavirus_business_support_p
19; (including referrals from Growth compelling relative to other remaining 10% paid upon a ackage_details_final.pdf
• offer “fast start” grants to Hubs and other organisations). applications. determination that the organisation
companies seeking follow on has continued its innovationa activity
funding; and The types of SMEs that should be as set out in its application.
• offer advisory support services to referred for support would meet the
around 6,000 high growth or following criteria: Continuity loans will have a maximum
scaling SMEs over the next 2 years • a vision that includes innovation term of 7 years, during which
over a 6-12 month period. and internationalisation; drawdowns may be made only during
• ambition for growth aiming for the first 2 years of the loan.
The scheme launched on 15 May 2020 over 20% year on year; and
and first payments are expected to be • a previous or current plan Personal guarantees will not be
made by early June 2020. towards a sustainable business required under the loans, however it is
model that could support such expected that security will be taken in
growth. the form of a mortgage debenture,
where available.
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All applications will be judged on merit.
The specific criteria for each product Funding will not be provided to support
will vary, being proportionate furloughed staff, or where the project
to the amount and purposes of the will not be continued during the
funding requested, and Innovate UK’s COVID-19 pandemic.
assessment of risk.
Bounce Back Under this scheme, businesses will This scheme is targeted towards small The scheme launched on Monday 4 Companies that have already received https://www.gov.uk/guidance/apply-
Loan Scheme have access to government-backed businesses in need of vital cash May. Businesses can apply online a loan of up to GBP 50,000 under for-a-coronavirus-bounce-back-loan
(BBLS) loans from GBP 2,000 up to 25% of the injections to keep operating and that: through a short form. CBILS, CLBILS or CCFF and wish to
business turnover, with a maximum transfer it into the BBLS can arrange to
loan of GBP 50,000. The funds will be • are based in the UK; The scheme will be delivered through a do so with their lender until 4
available to businesses within days of • were established before 1 March network of accredited lenders. November 2020.
applying, in order to provide 2020;
immediate support to businesses in • have been negatively affected by Eligible companies will be subject to The borrower always remains 100%
need. coronavirus; standard fraud, anti-money laundering liable for the debt.
and and know your customer checks prior
Loans under the scheme will be • are not already claiming under to any loan being made. Personal guarantees are not permitted
interest free for the first 12 months the Coronavirus Business under the scheme, and no recovery
and any additional fees will be paid by Interruption Loan Scheme action can be taken over a principal
the government. (CBILS), Coronavirus Large private residence or principal private
Business Interruption Loan vehicle.
Loan terms will be up to 6 years. No Scheme (CLBILS) or COVID-19
repayments will be due during the first Corporate Financing Facility
12 months, but early repayment is (CCFF).
permitted without early repayment
fees. The government has agreed with Businesses classed as a ‘business in
lenders that a flat interest rate of 2.5% difficulty’ on 31 December 2019 will be
will be charged for the remaining required to confirm their compliance
period of the loan. with additional state aid restrictions.
The government will provide lenders The scheme is not open to banks,
with a 100% guarantee for the loan. insurers and reinsurers (but not
insurance brokers), public sector
bodies, grant-funded further-education
establishments and state-funded
primary and secondary schools.
Trade Credit The government will temporarily The government support is targeted The government has confirmed that it https://www.gov.uk/government/news
Insurance guarantee business-to-business towards businesses with supply chains will work with businesses on the full /government-to-support-businesses-
Guarantee transactions currently supported by (e.g. within the manufacturing and details of the scheme to ensure that through-trade-credit-insurance-
Trade Credit insurance, to ensure that construction sectors) that rely on Trade businesses are supported. Further guarantee
the majority of insurance coverage will Credit Insurance and who are information is due to be announced in
be maintained across the market. experiencing difficulties maintaining due course.
cover due to COVID-19.
The government guarantee will be
delivered through a temporary
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reinsurance agreement with insurers
currently operating in the market.
The guarantee will be targeted towards
COVID-19 economic challenges, and
will provisionally last until the end of
the year.
Local Authority Under the scheme. small and micro The scheme is targeted at small and Companies may visit their local The grants are required to comply with https://www.gov.uk/guidance/apply-
Discretionary businesses with fixed properties with micro businesses that are: council’s website to find details of how European Commision’s Temporary for-the-coronavirus-local-authority-
Grants Fund fixed property costs and that are not • Based in England; to apply. The council will then run an Framework on State Aid, adopted on discretionary-grants-fund
eligible for the Small Business Grant • have fewer than 50 employees; application process and decide 19 March 2020.
Fund or the Retail, Hospitality and • have fixed building costs (e.g. whether to offer a grant.
Leisure Grant Fund schemes may be rent); Grants under the scheme are subject to
eligible for grants of up to GBP 25,000. • are not already claiming under tax, provided the business has made a
another government grant profit once grant income is included.
scheme;
• were trading on 11 March 2020;
and
• have been adversely impacted by
COVID-19.
Local councils have been asked by the
government to prioritise businesses
such as:
• small businesses in shared offices
or other flexible workspaces,
such as units in industrial parks or
incubators;
• regular market traders;
• bed and breakfasts paying council
tax instead of business rates; and
• charity properties getting
charitable business rates relief,
which are not eligible for small
business rates relief or rural rate
relief.
Insolvent businesses and those in
administration or that have received a
striking-off notice are not eligible for
the scheme.
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Details of reliefs available for businesses in UK devolved territories can be found here: Scotland, Wales, Northern Ireland
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