The purpose of this blog is to provide small to medium sized businesses (SMEs) a useful summary of some of the schemes offered by the UK government to support businesses through the COVID-19 outbreak. Specifically, here we focus on the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and Future Fund, all designed to support UK businesses that are losing revenue and seeing their cashflow disrupted as a result of the pandemic.
Bounce Back Loan Scheme (BBLS) (launched 4 May 2020 available until 4 November 2020)
Term: up to 6 years
Loan size: £2k up to 25% of their turnover (up to a maximum of £50k)
Other key features:
Coronavirus Business Interruption Loan Scheme (CBILS)
Loan size: up to £5million.
Interest: commercial rates
Future Fund (launched 20 May 2020; open until end of September 2020)
Eligibility: Available to UK companies that meet certain criteria, including:
Term: 36 months
Loan size: Convertible loans between £125k and £5 million
Matching funding: this is an investor-led scheme (i.e. the investor(s) needs to make the application, not the business) and subject to at least equal matching from private investors. Investor(s) must meet certain criteria (broadly, must be high net worth, professional or sophisticated investors).
Use of proceeds: working capital purposes only
Conversion: The loans will convert into shares in the company in certain circumstances, including an exit of a new funding round. More specifically:
Interest rate: 8% pa or higher if increased rate offered to private investors
Most favoured nation: British Business Bank automatically gets better terms if offered to private investors
Further information in relation to the Bounce Back Loan Scheme (BBLS) can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/
Further information in relation to the Coronavirus Business Interruption Loan Scheme (CBILS) can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/
Further information in relation to the Future Fund can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/future-fund/
Note that, notwithstanding the widespread criticism from tech investors and entrepreneurs in relation to the terms of the loans, the Future Fund has proved very popular, receiving applications for more than £450m on its first day of operation.