UK Government Backed Financing 2.0: Coronavirus Large Business Interruption Loan Scheme For UK Businesses Now Live

• Published date: 19 May 2020
• Author: Ms Lois Deasey, Amy Kennedy, Shaun Lascelles, Liz Osborne, Sebastian Rice, James Roome, Simon Rootsey, Barry G. Russell, Emma Simmonds and Rebecca Carwood Barron
• Subject Matter: Finance and Banking, Corporate/Commercial Law, Coronavirus (COVID-19), Financial Services, M&A/Private Equity, Corporate and Company Law, Contracts and Commercial Law, Asset Finance, Government Measures, Financing
• Law Firm: Akin Gump Strauss Hauer & Feld LLP

Further to the Chancellor's announcement on April 3, 2020, of the introduction of the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the CLBILS that is aimed at larger U.K. businesses is now live and the following further details have been provided / confirmed by the U.K. government:

• The U.K. government will provide accredited lenders with a guarantee of 80 percent of the outstanding balance of loans up to (i) '25m in relation to qualifying U.K. businesses with an annual turnover of between '45m and '500m and (ii) '50m in relation to qualifying U.K. businesses with an annual turnover in excess of '500m'helpfully, in the final terms of the CLBILS, the U.K. government removed the initially announced '500m turnover cap such that there is now no upper turnover limit and increased the loan amount to '50m for businesses over the '500m turnover threshold.
  
  
• As expected, CLBILS will be available through the British Business Bank's 40+ accredited lenders (which includes all the leading banks) in a similar manner to the Coronavirus Business Interruption Loan Scheme (CBILS) (being the U.K. government financing scheme aimed at U.K. small and medium-size enterprises (SMEs) that has been operating since March 23 2020 and, as at April 15, 2020, had provided finance of approximately '1.1 billion via over 6,000 loans).
  
  
• Again, as expected, the CLBILS will not provide cover for the first 12 months of interest payments (and lender fees) as like under the CBILS.
  
  
• Finance is available in the form of loans, asset finance facilities, revolving credit facilities (including overdrafts) and invoice finance facilities with repayment terms of between three months and three years.
  
  
• Larger eligible businesses can elect to apply for assistance via CLBILS or, if eligible and subject to its requirements, the COVID-19 Corporate Financing Facility (CCFF) (being the U.K. government scheme aimed at investment-grade companies that has been operating since March 23 2020 and, as at April 15, 2020, had provided approximately '7.6 billion of financing)'however, firms opting to participate in the CCFF are not eligible for CLBILS.

Overview of Key Terms of Each of CCFF, CLBILS and CBILS

A high-level overview of the key terms of each of the schemes and details on who is eligible to participate is set out in the Annex to this alert. As shown in that overview, and subject to the other relevant eligibility criteria and requirements, access to CLBILS, CCFF and CBILS based on business turnover only is now as follows:

Business size	Turnover	Turnover >'45m	Investment grade
CBILS	X
CLBILS		X	X
CCFF			X

Calculation of Turnover Thresholds

Generally, the turnover thresholds are calculated on a group basis (rather than an individual borrower basis) based on the preceding 12 months. After the initial announcement of the CLBILS, there were still a large number of potential borrowers who would have struggled to get under the '500m turnover cap (particularly those backed by private equity where, anecdotally, some banks were looking up to the private equity fund to calculate group revenue). The removal of the cap on the CLBILS (and confirmation by the British Business Bank that private equity portfolio companies will have their turnover assessed as a separate business) is positive news and means that the "group" turnover eligibility requirement is likely to be of less relevance. It also means that many larger businesses (including publicly listed companies) that were not investment grade pre-COVID-19 (and therefore could not access CCFF) will be able to benefit from government-backed financing.

If you have any questions around access to U.K. government support finance packages or the other schemes announced to date or in the future, Akin Gump is tracking and is available to assist.

Annex: High-level Key Terms of CLBILS, CBILS and CCFF

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