British Business Bank provides more information on recovery loan program and future fund after budget announcement
the British Investment Bank circulated a response following the budget presentation by Chancellor of the Exchequer Rishi Sunik. The Bank has played a key role in supporting UK businesses, as it has run a series of programs designed to support the economy.
In the budget were two programs which will be managed by the British Business Bank. This includes the Recovery Loan Scheme and the Future Fund: Breakthrough.
The Bank provides the following details on the plans:
Recovery loan program
The recovery loan program will be launched on April 6, 2021, following the closure of the current Covid-19 debt programs – the Coronavirus Business Interruption Loan Program (CBILS), the Interruption Loan Program Large Business Coronavirus (CLBILS) and Bounce Back Loan Program (BBLS) – March 31, 2021. The Recovery Loan Scheme is expected to last until December 31, 2021, but this is subject to review.
The new program aims to help businesses affected by Covid-19 and can be used for any legitimate business purpose, including managing cash flow, investments and growth. It is designed to attract businesses that can afford additional debt financing for these purposes.
- Installation up to £ 10million per company: The maximum value of an installation provided under the program will be £ 10million per company. The minimum facility size ranges from £ 1,000 for asset and bill funding to £ 25,001 for term loans and overdrafts.
- Turnover limit: There will be no turnover restriction for companies accessing the scheme.
- Wide range of products: Companies will be able to choose from a variety of products: term loans, overdrafts, asset financing and invoice financing facilities.
- Term: Term loans and asset finance facilities are available for up to six years, with overdrafts and bill financing available for up to three years.
- Interest and fees payable by the company upfront: Companies will be responsible for the costs of interest payments and all costs associated with the installation.
- Access to Multiple Plans: Businesses that have purchased a CBILS, CLBILS, or BBLS facility will be able to access the new plan, although the maximum they are allowed to borrow will depend on their lender’s assessment and plan requirements.
- Credit checks for all applicants: Lenders will be required to perform credit and fraud checks for all applicants. When evaluating, lenders may ignore concerns about short- to medium-term performance due to the pandemic. The checks and approach may vary from one lender to another.
Future Fund: Breakthrough
Future Fund: Breakthrough, to be launched in early summer 2021, is a new £ 375million program that will encourage private investors to co-invest with government in high growth, innovative companies. These R&D-intensive companies are accelerating the deployment of cutting-edge technologies that can transform key industries, develop new medicines and support the UK’s transition to a net zero economy.
Because of the high costs of research and development, high technology companies generally need more capital than other companies to fuel the later stages of their growth. Future Fund: Breakthrough will target R&D intensive companies looking for a minimum of £ 20million and attract private sector investment to support their growth.
Future Fund: Breakthrough will be issued by the British Business Bank, through its commercial subsidiary British Patient Capital. Further information is available on the British Business Bank website.
Catherine lewis la torre, Managing Director of British Business Bank, said:
“The Chancellor confirmed the central role of the British Business Bank in the next phase of the UK’s economic recovery after Covid-19. As businesses begin to prepare for the post-Covid period, they will need targeted funding to support them. We welcome today’s announcement of two new programs, one aimed at providing debt financing to a wide range of businesses, and the other at investing equity alongside the private sector in fast growing innovative companies. Both programs will help spur the innovation and growth needed to support the UK’s long-term prosperity.