Rishi Sunak has announced that access to the four coronavirus financial support schemes has been extended until 30 November 2020 for new applications.
This includes the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Future Fund which is the investment scheme for innovative and fast-growing UK-based businesses.
Support also continues through the COVID-19 Corporate Financing Facility which will remain open until 22 March 2021. This is 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.
In addition, the repayment of loans has become more flexible with options to extend repayment from six to ten years, switch to interest only, or for those in real trouble to suspend payments for a period of up to six months.
So what does this mean?
While the devil will be in the detail, it seems clear that the chancellor is trying to ensure that as the recovery from lockdown continues, albeit on a somewhat bumpy road, cash is not exhausted by repaying government loans back in the short term. Instead the money should be used to meet wage costs as the furlough scheme winds down and is replaced by a new Job Support Scheme.
Cash flow forecasts remain a director’s key weapon in surviving and planning a recovery from the crisis while ensuring that medium-term projections allow for the repayment of the loans within the new parameters. Along with the VAT deferral announcement and Job Support Scheme, the announcements seem to be intended to allow business to utilise cash to continue trading and therefore support the UK’s wider economic recovery.
Please do not hesitate to contact one of our partners to discuss the Mercer & Hole Recovery Plan should you wish to assess the impact of the announcements on your business.