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More small businesses set to benefit under CBILS

As a result of UK Government and industry lobbying, it has been announced that from 30th July 2020 more small businesses can benefit from loans under the Coronavirus Business Interruption Loan Scheme (CBILS) 

More small business may be breathing a sigh of relief today following the change announced to CBILS. Pressure placed by UK Government and industry representatives on the EU has led to a change in State Aid rules which means more small UK businesses will now be able to benefit from loans of up to £5 million - enabling them to bounce back, save jobs and have a chance of seeing out the COVID19 pandemic.

Tax team, MPA

Prior to recent changes, businesses that were classed as “undertakings in difficulty” were exempt from accessing CBILS because of restrictive State Aid rules. However, from 30th July any business with a turnover under £9 million and with less than 50 employees will be exempt from the “undertakings in difficulty” test and now will be able to apply for CBILs. 


What does “undertakings in difficulty” mean?

If a business is classed as “undertakings in difficulty”, the business would typically have a balance sheet that shows high levels of debt and accumulated losses.  

 HMRC would generally regard a company to be in this position when they meet the criteria for insolvency under the Insolvency Act 1986. 

 This includes when: 

  • The company is unable to pay its debts as they are due. 
  • The value of the company’s assets is less than the amount of its liabilities, considering the contingent and prospective liabilities. 


 Companies that fell under this classification before were eligible to only access Bounce Back Loans, although this was subject to State Aid limits. 


Why have the changes been made?

In short, the changes will be a key enabler to kick starting the UK economy allowing companies to build back better with the support of the Government. 

Previously businesses classed as ‘undertakings in difficulty’ could not claim under CBILS despite many having good growth prospects. From today the value of such business to the UK economy has been recognised.

Tax team, MPA

The UK Government has stood by businesses throughout the COVID19 pandemic, and this change to the EU rules on State Aid unlocks another financial support option for small business in financial difficulty. 

Small businesses play a vital role as we seek to recover our way of life and get the economy moving again, and it is essential we continue to support them through this difficult period.

Paul Scully MP Small business Minister

Will the changes affect you? 

If you have previously had your application declined, you may now be eligible to resubmit for loans up to £5 million under the CBILS incentive.  However, the changes announced will not apply to insolvent businesses or those that are already receiving rescue aid. 

Since the start of the pandemic, businesses have benefited from £50 billion in Government support. Over 57,000 have already accesses CBILS alongside other packages such as the Furlough scheme and approximately £10 billion in grants and tax deferrals. 

The government is still rewarding UK businesses who are engaged in developing new or existing products and services, through the R&D tax credit scheme. Small businesses can claim up to 33p per £1 spend on qualifying activity. To find out if you are eligible and to discuss funding options available to your business speak to one of our advisors today. 


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