The British Business Bank has distributed a response following the Budget presentation by the Chancellor of the Exchequer Rishi Sunik. The Bank has been a key factor in supporting UK businesses as it has managed a series of programs designed to backstop the economy.
Within the Budget were two programs that will be managed by the British Business Bank. This includes the Recovery Loan Scheme and Future Fund: Breakthrough.
The Bank provides the following details on the schemes:
Recovery Loan Scheme
The Recovery Loan Scheme will launch on 6 April 2021, following the closure of the current Covid-19 debt schemes – the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS) – on 31 March 2021. The Recovery Loan Scheme is scheduled to run until 31 December 2021, but this is subject to review.
The new scheme aims to help businesses affected by Covid-19 and can be used for any legitimate business purpose, including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.
- Up to £10m facility per business: The maximum value of a facility provided under the scheme will be £10m per business. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
- Turnover limit: There will be no turnover restriction for businesses accessing the scheme.
- Wide range of products: Businesses will be able to choose from a variety of products: term loans, overdrafts, asset finance and invoice finance facilities.
- Term length: Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.
- Interest and fees to be paid by the business from the outset: Businesses will be required to meet the costs of interest payments and any fees associated with the facility.
- Access to multiple schemes: Businesses who have taken out a CBILS, CLBILS or BBLS facility will be able to access the new scheme, although the maximum they are allowed to borrow will depend on their lender’s assessment and scheme requirements.
- Credit checks for all applicants: Lenders will be required to undertake credit and fraud checks for all applicants. When making their assessment, lenders may overlook concerns over short-to-medium term performance owing to the pandemic. The checks and approach may vary between lenders.
Future Fund: Breakthrough
Future Fund: Breakthrough, which will launch in early Summer 2021, is a new £375m scheme that will encourage private investors to co-invest with government in high-growth innovative firms. These R&D intensive companies accelerate the deployment of breakthrough technologies which can transform major industries, develop new medicines, and support the UK transition to a net zero economy.
Due to high research and development costs, breakthrough technology companies typically require more capital than other companies to fuel the later stages of their growth. Future Fund: Breakthrough will target R&D intensive companies seeking a minimum of £20m and will crowd in private sector investment to support their growth.
Future Fund: Breakthrough will be delivered by the British Business Bank, via its commercial subsidiary British Patient Capital. Further information is available on the British Business Bank website.
Catherine Lewis La Torre, Chief Executive of the British Business Bank, commented:
“The Chancellor has confirmed the British Business Bank’s central role in the next phase of the UK’s economic recovery from Covid-19. As businesses begin to plan for the post-Covid period, they will need targeted finance to support them. We welcome today’s announcement of two new schemes, one to provide debt finance to a broad range of businesses, and the other to invest equity alongside the private sector in fast growing innovative firms. Both schemes will help drive the innovation and growth needed to support the UK’s long-term prosperity.”