How much will I get under the scheme?

As part of the Coronavirus Bill there is some good news for tenants in so far as it included the following:

• All commercial tenants in England, Wales and Northern Ireland missing rent payments are to benefit from a government ban on forfeiture of their lease.
• Landlords then will be prevented from terminating leases and “evicting” commercial tenants.
• The above provisions rules will apply not only to principal rent, but to “any sum a tenant is required to pay”, leaving the burden of supplying services and insuring the premises on landlords. The bill will last until 30 June 2020, with an option for the government to extend this deadline.

Whist this is helpful to any Tenant planning not to pay rent or other payments due under their lease insofar as they will not suffer forfeiture and be evicted, it should be noted that the contractual obligation to continue paying rent and all other costs due under the lease remains and Landlords will still be able to take action to recover any payments due under the lease that are in arrears.

CBILS is made available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on their website (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/).  

 Businesses should initially approach their own lender and only consider other lenders if they are unable to access the finance they need. Note, not every accredited lender can provide every type of finance listed.   

 Some banks/lenders are not included in the list of accredited lenders which appears to mean that they cannot provide support through the Scheme. We understand from the British Business Bank that further lenders are applying to be accredited but that this may take a little time to process. If the provider of your senior debt is not on the accredited list you should consider approaching the bank which provides your day to day account banking services.

 If you wish or need to access the Scheme via an alternative funder the process may take longer as usual on-boarding and KYC processes will need to be undertaken.  

With the exception of the Covid-19 Corporate Financing Facility (see below), there was initially little dedicated financial assistance for medium-sized and larger businesses affected by the coronavirus outbreak (the so-called “stranded middle”); however, from 20 April 2020 such businesses (with a turnover above £45 million) have been able to access finance via the Coronavirus Large Business Interruption Loan Scheme (“CLBILS“).

CLBILS operates in a similar manner to CBILS except that a lender can provide:

• up to £25 million to businesses with turnover from £45 million up to £250 million; and
• up to £50 million to businesses for those with a turnover of over £250 million.

Finance is available in the form of:

• term loans
• revolving credit facilities (including overdrafts)
• invoice finance and
• asset finance,

in each case available on repayment terms of up to three years.

Several changes to CLBILS took effect from 26 May 2020. The maximum amount available through CLBILS to a borrower and its group increased from £50m to £200m. Term loans and revolving credit facilities over £50m will be offered by CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance and asset finance facilities remains at £50m. Companies borrowing more than £50m through CLBILS will be subject to further restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Further information on the most recent changes, including new provisions on seniority of CLBILS facilities, can be found on the CLBILS page on the British Business Bank website. There is also an in-depth FAQs section for businesses, which has the full details of the changes to the scheme.

Unlike CBILS, the UK government will not make payments to cover the interest and any lender-levied fees in the first 12 months of any facility so these larger businesses will not benefit from the no upfront costs and lower initial repayments that smaller businesses eligible for CBILS benefit from. The other key provisions of CLBILS, such as the eligibility criteria, the 80% government-backed guarantee and security, are similar to those of CBILS.

Eligibility is similar to CBILS and businesses must:

• Be UK-based in its business activity
• Have an annual turnover of more than £45 million
• Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty
• Self-certify that it has been adversely impacted by the coronavirus (COVID-19)
• Not have received a facility under the Bank of England’s Covid Corporate Financing Facility.

Businesses from any sector can apply, except the following:

• Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), insurers and reinsurers (but not insurance brokers)
• Building Societies
• Public-sector bodies
• Further-education establishments, if they are grant-funded
• State-funded primary and secondary schools

All lending decisions remain fully delegated to the accredited lenders.

• Do not require them to work
• Continue to communicate with and support them
• Allow them to work from home, is there alternative work for them to do if they can’t do their work from home
• Offer SSP or allow them to take holiday if they want to.

Details of your MHFAs should be posted somewhere that everyone can access easily – a specific area on an intranet or whatever alternative exists. Regular comms involving the MHFAs, webinar sessions, Q&A sessions and mental wellbeing drop in sessions are all ideas that may work well.