Update on the extension of CBILS


11th January 2021

The deadline for applying for a loan under the Coronavirus Business Interruption Loan Scheme (the "CBILS") has been extended. The Coronavirus Large Business Interruption Loan Scheme or the Future Fund, which offers lending of up to £5 million if matched by private investors, was originally due to expire at the end of September 2020, with the Bounce Back Loan Scheme (the "BBLS") due to expire at the beginning of November. 

Applications for loans under the CBILS, the BBLS and the Future Fund can now be made up to 31 March 2021. As part of the Winter Economy Plan the Government had already extended the application deadline for CBILS and the Future fund from 30 September to 30 November 2020 previously.

For more information on the Future Fund, please see our article of 5 June 2020 written by Kath Shimmin.

Change to repayment rules

A new “pay as you grow” approach has been introduced for the BBLS, with a borrower now being able to make interest only payments, or no repayments whatsoever for six months without it affecting their credit rating. The time frame for repayment of a loan under the BBLS and also the CBILS has been extended from six years to ten, together with the 80% Government-backed guarantee.

Change to BBLS top-up rules

From 10 November 2020, businesses that have borrowed less than the permitted maximum allowance under the BBLS scheme will be able to top up their existing loans. The amount available under the scheme is the lesser of either £50,000 or 25% of the annual turnover (as per the original successful BBLS application), less the value of the original loan.

The top-ups are only available from the existing lender, and the option can be only be exercised once.  To apply, borrowers are required to complete an application form from the BBLS accredited lenders, indicating the amount of top-up requested. Certain declarations from the initial application will also need to be provided again.

The Corporate Insolvency and Governance Act 2020

Extensions have also been announced by the Government regarding the operation of several provisions that were introduced by the Corporate Insolvency and Governance Act 2020 (“CIGA“) by way of a new statutory instrument, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 (the “Extension Regulations“). The existing provisions were due to expire on 30 September 2020, however, three new expiration dates for certain provisions have been set out by the Extension Regulations, which apply as below.

30 December 2020

  • The temporary relaxation of laws in relation to EGMs/meetings and voting arrangements for companies which were introduced by CIGA have now been extended until 30 December 2020. 

31 December 2020

  • Schedule 10 of CIGA introduced restrictions on the issuing of a winding-up petition of a company during the relevant period, which has now been extended until 31 December 2020. A company that is subject to a winding-up petition before the expiry of the relevant period will also not have to apply for any validation order under section 127 of the Insolvency Act 1986.

30 March 2021

  • The new restrictions introduced by CIGA on suppliers of goods and services terminating contracts with companies that have entered insolvency procedures have now been extended until 31 March 2020.
  • The temporary period in which a company can invoke the new moratorium introduced by CIGA has been extended to 30 March 2021, however, this extension is subject to change by the pending publication of The Corporate Insolvency and Governance (Coronavirus) (Early Termination of Certain Temporary Provisions) Regulations 2020.

The changes to the Coronavirus business support scheme will assist jobs and businesses that have been impacted by the pandemic and that are in need of support following the second national lockdown across England that started on 5 November 2020.

For further information on assistance for SMEs and Mid-Market Businesses, please see our article of 24 April 2020 written by Kath Shimmin.

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