This week, seven of the largest lenders to UK SMEs have written an open letter stating a key change to the CBILS application process:

“Following the changes to the scheme announced today, lenders will only ask businesses for information and data they might reasonably be able to provide at speed. We will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.

This means that business owners applying to Barclays Bank UK, Danske Bank, HSBC, Lloyds Bank, NatWest, Santander and Virgin Money no longer need to prepare a cash flow and business plan when applying for the CBILS.

Despite it now being a simpler process to apply, a business owner should consider if taking on debt at this time is the right thing to do. To help make this decision, preparing a forecast may be a very helpful tool to see how your cash position changes under different assumptions and scenarios.

Interaction between the BBLS and the Coronavirus Business Interruption Loan Scheme (CBILS)

Businesses will be able to borrow up to £50,000 under the BBLS, capped at 25% of turnover. In order to ensure that businesses have a clear understanding of the support available to them under the loan guarantee schemes, the minimum facility size for term loans and overdrafts under the CBILS will increase to £50,001 to avoid any risk of confusion or overlap.

Any customer with a CBILS loan or overdraft of £50,000 or less will be able to switch that facility to a BBLS loan should they choose to do so over the next few months. This change to the minimum facility size will not apply to asset finance and invoice finance CBILS facilities.

R&D Tax Credits and the CBILS

R&D Tax Credits and the CBILS are both classed as state aid. Please be aware that under state aid rules, businesses can only receive one form of state aid for a project.

HMRC have issued the following guidance on this:

Are new Government support schemes introduced in response to Coronavirus, such as CBILs, State aids or subsidies? Will they affect a company’s ability to make a claim under the SME scheme?

The Government has notified CBILS as a State aid under the European Commission’s new Temporary Framework for COVID-19. The measure is a fully notified aid, so the restriction on receipt of other State aid (s1138(1)(a) CTA 2009) potentially applies, if the CBILS relates specifically to the company’s R&D expenditure [on a project] rather than being intended more generally to support the company. This will depend on the facts. We will be monitoring the application of this rule and welcome feedback.

This appears to state that if a CBIL is received by a business to help finance a specific project, then that project is not eligible for future R&D tax credits (or at least SME R&D tax credits). It may still be eligible for RDEC.

However, if the CBIL is used for general business purposes (which seems more likely in most cases), then a project receiving R&D tax credits should still be eligible to receive them in the future.

It should be noted that HMRC has said they will be monitoring claims as they come which shows the answer is not black and white and further guidance is likely to be produced in due course.

If you have any questions about the scheme, please don’t hesitate to get in touch.


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