COVID-19: Business Grants, Loans & Other Funding

French Duncan


 

This article was updated 9pm Wednesday 13th May. Please check back regularly, or follow us on Twitter or LinkedIn to keep informed of all the changes.  For all our information around COVID-19 visit www.frenchduncan.co.uk/covid-19.

Contents:

This blog post contains details of the various grants, loans and funding available to support businesses through this period. To jump to a specific section please use these links, or just scroll down to read it all:

 

A. Business Grants:

There are a number of grants available to business, depending on your size, sector and needs.  This page provides a summary of each of these.  You will find the key details we know so far, and where possible a guide on how to apply or next steps you should take.

At French Duncan we're aware many businesses will face challenges ahead, but we're here to help and support, and you can contact us at any time. 

 

Pivotal Enterprise Resilience Fund:

PLEASE NOTE: Whilst the Pivotal Enterprise Resilience Fund was paused for new applications on Tuesday 5th May, and it was then announced that the Fund would double in size to £90m (see: https://www.gov.scot/news/sme-support-doubles-to-gbp-90m/).  Applications will re-open from mid-morning on Thursday 14 May 2020, however Scottish Enterprise do expect the capacity to be reached again; they have stated that it is likely to close again at 5pm on Monday 18 May but we expect that it could close much earlier.  We advise everyone to submit their application AS SOON AS POSSIBLE.  

The Scottish Government has recently announced a new £45m grant fund (then doubled to £90m), the Pivotal Enterprise Resilience Fund. This bespoke grant award is available for Scottish SMEs that can demonstrate they are vulnerable but can present a strong business case for a viable future. Firms need to prove that they are vital to the local, regional or national economy. The details are summarised below and more information can be found at: https://findbusinesssupport.gov.scot/service/coronavirus/pivotal-enterprise-resilience-fund

Successful applicants will be able to provide evidence of, or demonstrate impact in, one or more of the following areas:

  • Supporting Scotland’s productive capacity – through wage levels, employment, exports, Research & Development and innovation
  • Local economic importance which would include areas such as, employee numbers relative to place, delivery of essential services, wider economic and community value, plus the socio-economic importance of the business in remote and rural areas
  • Leverage on wider business community by demonstrating the impacts of your business on supply chain at a local, regional and national level
  • Being a supplier or potential supplier to NHS or other COVID-19 vital services
  • Being a supplier to other essential businesses
  • Demonstrating a need to rapidly scale up or diversify due to COVID-19

Eligibility criteria

  • Companies with up to 249 employees that have been trading successfully prior to Covid19
  • Less than £43.689 million turnover or balance sheet total of £37.572 million
  • Can demonstrate the funding will support the business to be viable
  • Not in financial difficulty before 31 December 2019
  • Must have business bank account

Information required:

  • Bank Details
  • Latest filed accounts and latest management accounts
  • 12 month cash flow projection (a template will be provided)
  • Information on other financial support including COVID-19 funding
  • Explain in what way you are pivotal to the local, regional or national economies
  • Information on how the grant be used and how it will help sustain or expand trading
  • Other important information for the Pivotal Company Resilience Fund:

Other important information for the Pivotal Company Resilience Fund:

  • Levels of employment and wages going into the local area will be considered when assessing applications and prioritising funding.  This means, for example, that companies employing less than 10 full-time equivalents (FTEs) in the city centres of Aberdeen, Edinburgh, Glasgow and Dundee are unlikely to be successful unless they can demonstrate a substantial impact on the city, regional or national economies.
  • Only one application will be accepted per company or group
  • Human Rights Due Diligence checks will be required for grant applications over £100,000.
  • Grant should be for working capital to help meet a cash flow gap and secure your future in the medium-term. These can include payments for rent, wages, directors’ salaries, heat, light & power, materials, transport, financing costs-VAT/HMRC, creditor payment.

Demonstrate that you are vital to the local, regional or national economy:

In this section of the application form, you should provide a brief outline of the wider contribution that your business makes to your local community or region of Scotland. As above, this could include benefits that extend to other businesses, local supply chains, associated employment and wider social and community benefits.

In addition, any benefits associated with increased R&D activity, innovation, export potential, increased productivity, diversity and equality, skills and training, supply chain opportunities and a net zero carbon economy could also be included

 

Grants to help businesses - £10k - £25k:

Businesses can now apply for grants to help them deal with the impact of the coronavirus COVID-19) outbreak. The one-off grants are designed to help protect jobs, prevent business closures and promote economic recovery, and more than 90,000 ratepayers across Scotland will be able to benefit.

Small businesses in receipt of the small business bonus scheme or rural relief, as well as hospitality, leisure and retail business can benefit.

Two types of grant are now available to ratepayers:

  • a one-off £10,000 grant to ratepayers of small businesses (1 below)
  • a one-off grant of £25,000 available to retail, hospitality and leisure (2 below) business ratepayers with a rateable value between £18,001 and £50,999. This is the rateable value as at 17 March 2020 regardless of any subsequent reduction in rateable value due to an appeal. This is only available if they were the ratepayer for a premises occupied for that business use on 17 March 2020.

Local authorities are administering the scheme on behalf of the Scottish Government, and are looking to make payments to successful applicants within 10 working days. Application forms can be found on your local council website, or can be provided by our team at French Duncan who are also available to discuss any queries you have on the application form.

  1. The one-off £10,000 grant is available to ratepayers of small businesses in receipt of the Small Business Bonus Scheme (SBBS) or Rural Relief, or eligible for SBBS in receipt of Nursery Relief or Disabled Relief, and with rateable value up to £18,000.  The Scottish Government has taken the decision to exclude non-domestic property classifications which are not small businesses in the traditional sense. Examples include Advertising, ATM Sites, Car Parks, Public Toilets.
  2. The Scottish Government on 30th March expanded this support to also include some furnished holiday let landlords, but including ‘caravans and self-catering accommodation that are the primary income for the ratepayer and let out for 140 days or more in 2019-20'.
  3. On 15th April the Scottish Government further expanded, stating that "in addition to a 100% grant on the first property, small business rate payers will be eligible to a 75% grant on all subsequent properties...and the new arrangements for the Small Business Grant will be in place to receive applications on 5 May." (see: https://www.gov.scot/news/additional-support-for-business/).
  4. Further detail on the specific uses to which the business premises is required to be put to in order to qualify as operating within these sectors is provided on the application form.

Some other sector-specific grants & funding available:

  • Construction Sector: i-Con Innovation Challenge Fund is open for solutions providers with close to market ideas that could help the Scottish construction sector right now or with recovery. Awards of up to £25,000 are initially available for projects that will create impact and help build resilience in the sector. More information can be found by clicking here
  • The Prince’s Trust and NatWest Enterprise Relief Fund: The £5million Enterprise Relief Fund will offer grants to 18 to 30-year olds across the UK who are self-employed and/or running their own business, more information can be found by clicking here
  • Museums Galleries Scotland: Information is available on their website, which includes:
    • Charities Aid Foundation
    • Heritage Emergency Fund
    • Museum and Galleries Fund (Urgent Response and Capital Equipment)
  • Creative Scotland COVID-19 Impact Funds: Creative Scotland has launched three funding programmes designed to provide further support to sustain the country’s creative community during the COVID-19 outbreak: 
    • Creative Scotland Bridging Bursary Fund - £4m fund offering one-off bursary payments of £500 to £2,500 to help sustain creative practice by freelance creative professionals who have lost earnings due to the cancellation of work as a result of COVID-19.  
    • Screen Scotland Bridging Bursary Fund - £1.5m fund will provide similar one-off bursary support to self-employed screen sector workers. They have also announced development support of between £3,000-£50,000 for Scotland’s independent film and TV production companies.
    • The Open Fund: Sustaining Creative Development will provide support for individuals and organisations to sustain their creative development in the coming months. Applicants will be encouraged to use funding to explore how best to sustain their practice, and reimagine their work, during the current climate and in the months to come. Funds may also be used for the development and presentation of work. The £7.5m fund will support up to 12 months of activity with a maximum award of £50,000. Details on who can apply for this funding can be found here by clicking here
  • Charities / Third Sectors: The Third Sector Resilience Fund (TSRF) is a £20m emergency fund for charities, community groups, social enterprises and voluntary organisations working in Scotland. The fund supports organisations that already deliver services and products but find themselves in financial difficulties directly as a result of the coronavirus pandemic. More information can be found on the SCVO website by clicking here. [You can find more info. specific to charities on this seperate blog by clicking here.]
  • Pivotal Enterprise Resilience Fund: A Pivotal Enterprise Resilience fund was announced by the Scottish Government on 21 April 2020, supporting vulnerable SMEs who are vital to the local or national economic foundations of Scotland. Support will be based on specific need and will be developed by the relevant enterprise agency together with wraparound business advice and support. More details will be provided here as soon as available.
  • Creative, Tourism & Hospitality Enterprises Hardship Fund: A new Creative, Tourism & Hospitality Enterprises Hardship fund was announced by the Scottish Government on 21 April 2020 in partnership with Creative Scotland and Visit Scotland. It will provide support to creative, tourism and hospitality companies of up to 50 employees who are not in receipt of business rates relief, providing £3,000 hardship grants or larger grants up to £25,000 where it can be demonstrated support is needed. More details will be provided here as soon as available.

 

B. Business Loans:

Alongside Grants, there are also a number of loans available to business, depending on your size, sector and needs.  This section provides a summary of each of these. 

 

Coronavirus Business Interruption Loan Scheme (“CBILS”) - For businesses with annual turnover of no more than £45m:

This scheme is now available through certain providers (likely to be the ones detailed by clicking here).  Summary details available at present are:

  • Funding will be provided by the British Business Bank through participating providers offering more attractive terms for both businesses applying for new facilities and lenders.
  • CBILS guarantees facilities up to a maximum of £5 million, available on repayment terms up to six years (for term loans and asset finance) and up to three years (for overdrafts and invoice finance facilities).
  • The lender receives a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
  • Access to the scheme has now been opened up to smaller businesses facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility.
  • You may therefore consider re-contacting your lender if you have previously been unsuccessful in securing funding via this scheme.
  • Lenders will not require a personal guarantee for loans less than £250,000.
  • For facilities above £250,000, personal guarantees may still be required, at the lender’s discretion, but:
    • they exclude the Principal Private Residence (PPR), and
    • recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.
  • It’s important that you are aware that you, the borrower, will always remain 100% liable for the debt. The CBILS guarantee is to the lender, not you as the SME.
  • The Government will cover the first 12 months of interest payments. The business remains liable for repayments of the capital.
  • Government will also pay for the lender-levied fees in relation to arranging this financing to alleviate initial set-up costs for businesses.

Full eligibility criteria will be published in due course but to be eligible for support via CBILS, the  business must:

  • Be UK based, with turnover of no more than £45m per annum;
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see below).
  • Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years.
  • Have a sound borrowing proposal.

Please note that a limited number of further eligibility restrictions will apply.

Almost all business sectors are eligible, however there are a small number of excluded/restricted sectors arising primarily from EU de minimis-State aid rules.

What you need to do to apply:

We advise that your first stop should be to speak to your incumbent bank who will likely facilitate the loan for you.  However you will probably need both financial projections and a high level business plan in order to move forward, both of which we will be able to assist with - so speak to any of the colleagues listed below.

Our team work with the majority of the providers in Scotland on a regular basis and will be able to assist you through the application process.

 

Coronavirus Large Business Interruption Loan Scheme (CLBILS):

Will offer loans of up to £25m to firms with an annual turnover of between £45m and £500m, which come with a government guarantee of 80%. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest, so unlike the scheme for small to medium-sized businesses, they will not get a 12-month holiday on paying the interest and fees involved.

For a business with turnover of between £45m to £250m, an accredited lender can provide lending of up to £25m.  For a business with turnover of over £250m, lending is up to £50m. The accredited lender is able to utilise a government-backed partial guarantee of up to 80%.

Other key points to note:

  • Maximum repayment term is 3 years.
  • The amount borrowed should not be greater than:
    • (i) double the borrower’s annual wage bill for the most recent year available, or
    • (ii) 25% of the borrower’s total turnover for the most recent year available, or
    • (iii) with appropriate justification and based on self-certification of the borrower, the amount may be increased to cover their liquidity needs for the next 12 months.
  • Unlike CBILS, the Government will not cover the interest and any lender-levied fees in the first 12 months.

More information on this scheme, which went live on Monday 20th April, can be found on the British Business Bank website (click here).

 

Bounce Back Loan Scheme

We believe this option will be relevant to many clients as it is intended to provide the most accessible route to quick cash. If you're unsure, here is what our Partner Greg Callan has to say on it:

“In my view the terms of the Bounce Back Loan Scheme make it a sensible choice for any business impacted. At no cost for the first year it can provide a safety net, delivering peace of mind that your business has funds to fall back on if required – the big unknown is timescale and this loan helps mitigate the impact.  At a fixed 2.5% interest rate after year one, it could also help businesses to make longer-term plans – plus it has a simple application process and speedy turn-around-time. I would advise every business to strongly consider this option.”

The Bounce Back Loan scheme will help small and medium-sized businesses access loans worth up to 25% of their turnover, to a maximum of £50,000. So if your annual turnover was £150,000 you could apply for a loan of £37,500 (25%). If your turnover is greater than £200,000 the loan would be capped at £50,000. The lower limit on the loans is £2,000.

The government will guarantee 100% of the loan meaning firms don’t need to go through lengthy credit checking processes, and there won’t be any fees, interest or capital repayments to pay for the first 12 months. Loan terms will be up to 6 years.

What you get:

  • Straightforward application with quick access to funds
  • Government covers the first 12 months of interest (this means you pay 0% for the first year)
  • Loan amount of up to £50,000 or 25% of your annual turnover if that is lower
  • No repayments required for the first 12 months
  • 6-year loan with no early repayment charges

Eligibility:

  • Existing customer of an accredited BBL lender
  • UK-based business which has been impacted by Covid-19
  • You don’t already have a CBILS loan, unless you are refinancing it in full.

Repayment example:

  • Representative 2.5% APR
  • Loan amount £25,000
  • Interest rate 2.5% (fixed) p.a.
  • Term 72 months
  • First monthly repayment £469.75
  • Total amount repayable £27,215.81.

You cannot apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS). If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020. More information can be found on the Government website by clicking here

 

You may also find this blog by Greg Callan of interest, entitled 'Cash is Reality'.

 

C. Other COVID-19 Funding options: 

Coronavirus Job Retention Scheme ("CJRS"):

We have a separate blog article all about what we know, and don't yet know, about this.  Please visit: www.frenchduncan.co.uk/blogs-news/covid-19-hr-staffing/.

 

Innovation / Research & Development Funding Package:

The overall package of £1.25 billion was announced on Monday 20th April, and is made up of two elements which we've called A and B:

A: a £500 million investment fund (the Future Fund) for early stage, high-growth companies impacted by the crisis, made up of funding from government and the private sector.

This will be delivered in partnership with the British Business Bank and will provide UK based companies with between £125,000 and £5 million from the government, with private investors required to at least match the government commitment. The loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.

To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third-party investors in the last 5 years. The scheme will initially be open until the end of September. Further detail on eligibility criteria and fund operation will be published in due course.

More information can be found on the Government webpage about the Future Fund (click here).

B: £750 million in grants and loans aimed at SMEs focusing on Research & Development.

The £750 million of support for the most R&D intensive SMEs will be available through Innovate UK’s existing grants and loan scheme.

Innovate UK will accelerate up to £200 million of grant and loan payments for its 2,500 existing customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. Innovate UK expects that the first payments will be made by mid-May.

Please note, in many cases Innovate UK claims require to be certified by an independent accountant. The French Duncan Grants Team has extensive experience in this area and would be happy to provide any advice, and full contact details for four members of this team can be found directly below.

 

COVID-19 Loans/Grants and State Aid definition:

We're aware of discussions and queries around the various COVID-19 Loans / Grants, and whether any of these count as 'State Aid', which in turn to preclude other support or tax credit schemes.  Our Corporate Tax team have written separately about this, which can be found on this webpage by clicking here.

 

Contact details:

At French Duncan we have a lot of experience in grant funding and loan agreements, so will be able to help you through our dedicated teams covering Corporate Advisory, Business Restructuring, Corporate Taxation & HR Services.

Whilst some of our staff are currently working from home, all of the above can be contacted on their email addresses or on 0141 221 2984.

 

Other COVID-19 Information:

For all our help, support and information around COVID-19 / Coronavirus visit www.frenchduncan.co.uk/covid-19, where you can link to articles deferring HMRC payments, tax and business rates, debt assistance & restructuring and much more.

 

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