The Chancellor Rishi Sunak today outlined additional government support to provide certainty to businesses and workers impacted by coronavirus across the UK. The package includes a new Jobs Support Scheme to protect millions of returning workers, a 15% VAT cut for the hospitality and tourism sectors, and help for businesses in repaying government-backed loans.

The government is extending the temporary loan schemes, which have helped over a million businesses to date, to 30 November 2020 for new applications:

• Bounce Back Loan Scheme (BBLS) – BBLS has provided £38 billion of finance through more than a million loans to UK-based small businesses, many of which had not previously borrowed. Loans are between £2,000 and £50,000, capped at 25% of turnover, with a 100% government guarantee to the lender to provide them with the confidence they need to support the smallest businesses. The borrower does not have to make any repayments for the first twelve months, with the government covering the first twelve months’ interest payments. Under the new Pay as you Grow options (see below), Bounce Back Loan borrowers will all be offered the choice of more time and greater flexibility for their repayments.
• Coronavirus Business Interruption Loan Scheme (CBILS) – CBILS has provided over 66,000 loan facilities worth £15.5 billion to eligible UK-based businesses with turnover under £45 million. The scheme provides loans of up to £5 million with an 80% government guarantee to the lender, giving lenders the confidence to provide finance to SMEs. The government does not charge businesses for this guarantee and also covers the first twelve months of interest payments and fees.
• Coronavirus Large Business Interruption Loan Scheme (CLBILS) – CLBILS has provided more than 566 facilities worth over £3.8 billion to eligible UK-based businesses with turnover above £45 million. The scheme provides loans of up to £200 million (to a maximum of 25% of turnover), with an 80% government guarantee to the lender, which is more generous than equivalent schemes in many other countries.

Support also continues through the COVID-19 Corporate Financing Facility which will remain open until 22 March 2021. Where a company has exhausted all other options, and is of strategic importance to the UK, the government may also consider providing bespoke financial support.

Pay as you Grow: The government will give all businesses that borrowed under the BBLS the option to repay their loan over a period of up to ten years. This will reduce their average monthly repayments on the loan by almost half. UK businesses will also have the option to move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments). These changes will provide greater flexibility to repay these loans over a longer period and in a way that better suits businesses’ individual circumstances.

CBILS loan extension: The government intends to allow CBILS lenders to extend the term of a loan up to ten years, providing additional flexibility for UK-based SMEs who may otherwise be unable to repay their loans.

VAT deferral ‘New Payment Scheme’: The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Over half a million businesses deferred VAT payments,²⁸ a cash injection of £30 billion into the UK economy when it needed it most. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.

Further details can be found on the Government’s website here.