On the 24th September, the Chancellor of the Exchequer, Rishi Sunak, announced several changes to the government’s three Coronavirus Business Interruption Loan Schemes and the Future Fund. All of the aforementioned schemes have had their end dates aligned to the 30th November, meaning that businesses have an additional two months to apply for any funding needed to support them through the Coronavirus pandemic.
Additionally, businesses will be able to apply for a Bounce Back Loan over a maximum of ten years, rather than the previous maximum term of 6 years. This will mean a reduction of almost half of monthly repayments, giving a welcome boost to cash flow for businesses looking to borrow under this scheme. Bounce Back Loan holders will also have the option to take a 6 month holiday or interest only period during the duration of the loan as well, as the government looks to support businesses which may be struggling to meet repayments.
New guidance has also been introduced around the ‘undertaking in difficulty’ assessment, which can now use the application date, rather than the previous date of 31st December 2019, when looking to meet the key criteria. Businesses that were ‘undertakings in difficulty’ on 31 December 2019 but are no longer ‘undertakings in difficulty’ will now be (in principle) eligible for the schemes.
This flexibility means that businesses can take action to convert their debt (for example, in the form of loan notes) to shares (equity) in order to qualify for the schemes, giving them the option to restructure their finances before application so they may become eligible.