Key information relating to measures announced in the Budget
Following the Budget announcement on 3rd March, we’ve put together the key information you need to know.
You can also read UKBAA’s thoughts on the Budget and its impact on the ecosystem.
Recovery Loan Scheme
The Recovery Loan Scheme will launch on 6 April 2021, following the closure of the current Covid-19 debt schemes on 31 March 2021, and is scheduled to run until 31 December 2021, but this is subject to review.
The new scheme aims to help businesses affected by Covid-19 and can be used for any legitimate business purpose, including managing cashflow, investment and growth. It is designed to appeal to businesses that can afford to take out additional debt finance for these purposes.
Key features of the scheme:
- Up to £10m facility per business: Maximum value of a facility provided under the scheme will be £10m per business. Minimum facility sizes vary, starting at £1,000 for asset and invoice finance, and £25,001 for term loans and overdrafts.
- Turnover limit: There will be no turnover restriction for businesses accessing the scheme.
- Wide range of products: Businesses will be able to choose from a variety of products: term loans, overdrafts, asset finance and invoice finance facilities.
- Term length: Term loans and asset finance facilities are available for up to six years, with overdrafts and invoice finance available for up to three years.
Under the Recovery Loan Scheme, businesses will be required to meet the costs of interest payments and any fees associated with the facility from the outset. Businesses who have taken out a CBILS, CLBILS or BBLS facility will be able to access the new scheme, although the maximum they are allowed to borrow will depend on their lender’s assessment. Lenders will be required to undertake credit and fraud checks for all applicants, where they can overlook concerns over short-to-medium term performance owing to the pandemic.
Future Fund: Breakthrough
Future Fund: Breakthrough, which will launch in early Summer 2021, is a new £375m scheme that will encourage private investors to co-invest with government in high-growth innovative firms. These R&D intensive companies accelerate the deployment of breakthrough technologies which can transform major industries, develop new medicines, and support the UK transition to a net zero economy.
Due to high research and development costs, breakthrough technology companies typically require more capital than other companies to fuel the later stages of their growth. Future Fund: Breakthrough will target R&D intensive companies seeking a minimum of £20m and will crowd in private sector investment to support their growth.
Future Fund: Breakthrough will be delivered via British Patient Capital, a commercial subsidiary of the Bank.
Review of R&D Tax Reliefs
The Chancellor has launched a review of R&D tax reliefs, and a consultation document has been published inviting views from R&D stakeholders. This follows the consultation last year on expanding the qualifying expenditures to include cloud computing and data. The summary of responses for this consultation has also been published today alongside the Budget (www.gov.uk/government/consultations/the-scope-of-qualifying-expenditures-for-rd-tax-credits-consultation ).
Enterprise Management Scheme: Call for Evidence
The Treasury is publishing a call for evidence today on whether and how more UK companies should be able to access Enterprise Management Incentives to help them recruit and retain the talent they need to scale up. Also on EMI, we will be extending technical changes to protect eligibility for employees who have had to work reduced hours because of Covid-19.
