The Prince’s Trust and NatWest launch £5m grants for young entrepreneurs affected by coronavirus

The Prince’s Trust and NatWest have today announced the launch of a £5m fund to help young entrepreneurs across the UK to keep their businesses afloat during the coronavirus crisis.

The Prince’s Trust and NatWest Enterprise Relief Fund is available to entrepreneurs aged 18-30, who can apply for grants and tailored support from today. Grants can be used to maintain core business operations during the crisis, as well as meet any existing financial commitments, such as paying for essential equipment or settling invoices from suppliers. In conjunction with these grants, the initiative will also offer one-to-one support and guidance to applicants who need it.

To be eligible, businesses must have started up in the last four years and be run by someone aged 18 to 30. Young people who are in the process of starting a business and don’t have any other source of income during the crisis are also eligible to apply for a grant. To apply for funding and support from The Prince’s Trust and NatWest Enterprise Relief Fund visit https://www.princes-trust.org.uk/about-the-trust/coronavirus-response/enterprise-relief-fund.

Alison Rose, CEO, NatWest Group said:

“We know that the impacts of the coronavirus are being felt by the UK’s businesses and we are doing everything we can to support our customers through these unprecedented times. It is imperative that the next generation of entrepreneurs also get the support that they need to ensure they get through this period, and I am pleased to be partnering with The Prince’s Trust to offer these grants to the UK’s young and up and coming businesses.”

Jonathan Townsend, Interim UK chief executive of The Prince’s Trust said:

“It is more important than ever to encourage and protect the entrepreneurial spirit of young people in the UK. Small and medium sized businesses make up most of this country’s economy and we need the next generation of entrepreneurs to come out fighting on the other side of this crisis. The challenge, in the short term, is that many young entrepreneurs whose business models are ordinarily completely viable are now suffering a considerable loss of income during this unprecedented economic time.

That’s why this new fund is so crucial; it’s a lifeline that will help these businesses make it through the challenging time ahead. It complements support from the government and allows us to provide grants to those who need it most.”

The Fund builds on the existing partnership between The Prince’s Trust and NatWest which supports young entrepreneurs in the UK. Since 1983, The Prince’s Trust has supported over 88,000 young people to start their own business through its Enterprise Programme. NatWest Group is the largest and longest supporter of this programme.

Entrepreneurs aged 18-30 who are not eligible for the fund but find their businesses to be affected by coronavirus can contact The Prince‘s Trust for support. Every young person who gets in touch will be offered personalised one to one support to connect with mentors or build their skills.

As part of its wider response to coronavirus, The Prince’s Trust has launched its Youth Action Plan to show how it will support young people who are out of school, unemployed, self-employed or generally needing a confidence boost over the coming weeks and months. If you would like to find out more, or to help The Trust in its mission to be there for the nation’s young people, search ‘Prince’s Trust’ online.

NatWest has put in place a broad package of financial support with solutions for business customers, large and small, during the crisis:

• Capital repayment holidays to help customers reduce the impact on their working capital from repaying existing loan facilities.
• NatWest has opened up the Government’s Coronavirus Business Interruption Loan Scheme (CBILS) to more customers, that are eligible under the scheme rules, than any other Bank. The minimum loan size that we offer under the CBILS scheme is £5,000 and available to sole traders & partnerships as well as limited companies.
• NatWest will not take a new or increased personal guarantee from any customer that obtains funding through the CBILS scheme.
• Fee free overdraft facilities up to £5,000.

Banking Competition Remedies market update

Banking Competition Remedies Ltd (BCR), the independent body established to implement the £775m Royal Bank of Scotland (RBS) State Aid Alternative Remedies Package, today issues updates regarding both the Capability and Innovation Fund and the Incentivised Switching Scheme.

Capability and Innovation Fund (CIF) Updates

Nationwide returns £50m grant

The Alternative Remedies Package (ARP) that BCR is delivering includes in its processes an ability for awardees to revise their original business cases, subject to the approval of the BCR Board.

Recently Metro Bank, due to changes in its strategy, proposed a Revised Business Case to BCR under which it would continue to deliver part of the original business case while returning £50m of the funding. This was approved by BCR and this funding is now available for redeployment under the CIF scheme.

Nationwide has announced that due to the impact of COVID-19, including assumption changes to short and long-term interest rates, the option of entering the business banking market is no longer commercially viable. Its board has therefore decided not to proceed at this time with its Nationwide for Business proposition and its plans to turbo charge that proposition with the £50m CIF grant. BCR has accepted a Revised Business Case from Nationwide in line with the established process in which Nationwide will return, with interest, the full £50m grant awarded. This further funding will now also be available for redeployment under the CIF scheme.

£100m funding to be redeployed

Although the rules under which BCR operates meant that BCR was unable to seek applications or make the funding available until considerably later in the programme, BCR has now agreed with HMTreasury (HMT) and RBS to bring this process forward in order to enable the funds to be deployed to potential applicants in supporting the UK SME market as soon as is feasible.

By the end of April, BCR will set out the consultation, expression of interest and application processes, eligibility criteria and other relevant information so that applicants can register their interest and start preparing their applications.

BCR said: “These returns of funds and the further funding round announced today are in line with the design and processes of BCR. Awardees’ businesses evolve in the light of changing circumstances and both Metro and now Nationwide have been very straightforward with BCR about their respective cases. The outcome is that BCR has some £100m to redeploy and has now achieved the necessary agreements to do so earlier than was otherwise possible.

“This is positive news for the many potential applicants who have already contacted us. Our awardees are delivering competitive and valuable solutions at a time of great challenges for SMEs and those who serve them. We will deploy these funds, as foreseen in the design of BCR and now accelerated, in further support of innovative ideas to improve competition in financial services to SMEs.”

Incentivised Switching Scheme (ISS) Update

Dowry payments to SMEs can be accelerated

Currently SME customers switching banks under this scheme receive a ‘dowry’ payment from the participating body to which they switch.

Customers with a turnover of above £1m receive this money in two tranches, one at switch and one 12 months later.

BCR, with the agreement of HMT and RBS, has decided (effective immediately) to waive this requirement. This means that banks that wish to do so can pay across the full dowry at switch and release the retained element of the dowry for those that have switched in the last twelve months.

It is expected that ISS Participants that choose to pass on the dowry will be able to do so by 30th April 2020. This waiver will remain in place until the current expiry of ISS in August 2020.

This step will both enhance the effectiveness of the switching scheme in incentivising customers to switch their accounts from RBS and aid transferred customers in the current period of cashflow challenges.

British Business Bank: coronavirus loan scheme expanded

Launched on 23 March, today the Coronavirus Business Interruption Loan Scheme (CBILS) has been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the coronavirus crisis can access funding.

Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme.

Since CBILS launched less than two weeks ago, almost 1,000 facilities valued at £90.5m have been approved by lenders accredited to the British Business Bank’s CBIL Scheme. More than 80% of the UK’s smaller businesses have a finance relationship with CBILS accredited lenders.

The first facility was delivered under the scheme by Yorkshire-based Skipton Business Finance, with other lenders including the Business Enterprise Fund, Newable Business Loans, the Northern Powerhouse Investment Fund, Finance For Enterprise, Danske Bank, Clydesdale Bank and HSBC. The number of providers of the scheme will continue to grow and new alternative finance lenders will continue to be accredited to the scheme creating more choice and diversity of supply for smaller businesses.

About the scheme

The Coronavirus Business Interruption Loan Scheme, delivered through 40+ British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

It supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

Updated scheme features

• No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
• Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
• Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment.

We have communicated that these changes should be retrospectively applied by lenders for any CBILS facilities offered since 23 March 2020. For any commercial (non-CBILS) facilities offered since the same date, providing the borrower meets the CBILS eligibility criteria, lenders have been asked to bring these facilities onto CBILS wherever possible (e.g. where the lender is accredited to offer the same facility through CBILS) and changes retrospectively applied as necessary.

Existing scheme features

• Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years
• No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
• Interest and fees paid by government for 12 months: The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
• Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
• 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80% gross) against the outstanding facility balance, subject to an overall cap per lender.
• Principal Private Residence (PPR) – A borrower’s/guarantor’s PPR cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
• The borrower always remains 100% liable for the debt.

New eligibility criteria

• Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, a smaller business must:
• Be UK based in its business activity, with turnover of no more than £45m per year.
• Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.
• Self-certify that it has been adversely impacted by the coronavirus (COVID-19).

Keith Morgan, chief executive, British Business Bank, said: “It was essential to get the Coronavirus Business Interruption Loan Scheme up and running as quickly as possible to get additional funding flowing to smaller business. We have seen an incredible demand for CBILS since it launched, so opening up access to the scheme to even more smaller businesses across the UK will enable lenders to expand their support, deploying vital funding where it is most needed.”

How to apply

CBILS is available through the British Business Bank’s 40+ accredited lenders, which are listed on the British Business Bank website.

In the first instance, businesses should approach their own provider, ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need. Not every accredited lender can provide every type of finance available under CBILS.

ONS report shows 50% of UK businesses record lower turnover

The Office of National Statistics has released its initial results from the new Business Impact of Coronavirus (COVID-19) Survey (BICS), understanding what impact the COVID-19 has had on businesses and employees across the UK. It revealed that 28.5% of employees have seen a decrease in working hours, 46.1% have been encouraged to work from home, and 46.2% have to work from home. However and most startingly, 44.6% of businesses have seen a lower than the normal range of turnover from the 9th until 22nd March, due to the COVID-19 crisis.

This comes, last month, as the IHS Markit/Cips private sector purchasing managers’ index (PMI) – a gauge of economic performance – plunged to a record low of 37.1 in March from 53 in February. A score of under 50 indicates contraction, meaning the private sector shrank at an unprecedented pace this month.

In the UK, business activity crashed at a record pace in March as efforts to contain coronavirus sent the UK economy into a tailspin, preliminary survey data has shown, putting Britain on track for an extreme recession.

Luke Davis, CEO and rounder of IW Capital, a leading EIS SME investment firm, has commented on the results of the survey.

“Hopefully, these figures from the first ONS Business Impact of Coronavirus Survey are in line with what has been reported, but will not have the added benefit of the government support that was announced after the survey date. What we are seeing at IW Capital is that SMEs and investors are keen to keep their businesses operating as normally as possible in order to fulfil contracts, continue the employment of their staff and grow despite the difficult circumstances.

The SME arena is 99% of the private sector and employs two-third of British employees, so ensuring their output and profit is essential for the continuation of the British economy. Support for nimble startup and scale-up business, particularly those that want to help fight this virus with the government and the NHS, is absolutely key at this moment in time, and I hope officials and investors continue to support our fantastic entrepreneurs and businesses to help Britain out of this crisis and thrive on the other side.

Aldermore offers the CBILS to help SMEs

Aldermore, the specialist bank, today confirms it is now offering the asset finance variant of the British Business Bank’s Coronavirus Business Interruption Loan Scheme (CBILS), having been an accredited lender under the former Enterprise Finance Guarantee scheme.

CBILS provides Aldermore and other accredited lenders with a government-backed guarantee potentially enabling Aldermore to provide asset finance facilities to SMEs to support their investment in new and used assets. In the absence of the CBILS scheme, those SMEs would ordinarily have difficulty raising such finance due to the impacts of COVID-19. It is now being rolled out across Aldermore’s asset finance broker network to enable them to support UK SMEs during this period of uncertainty.

Whilst Aldermore will only offer the asset finance element of the programme in the first instance, it has plans to join other variants of the scheme – helping it to provide further funding to support SMEs build business confidence for recovery and growth during this unparalleled time.

Since being established in 2009, Aldermore has consistently increased its support for UK SMEs. CBILS will provide Aldermore with a government-backed guarantee against eligible facilities, allowing it to broaden its reach to customers who are unable to secure funding.

Tim Boag, group managing director, business finance at Aldermore, said: “We are delighted to continue working with the British Business Bank to offer our customers this scheme, building on our credentials as a leading funder for brokers looking to finance assets of all shapes and sizes.

“Small and medium-sized enterprises are the backbone of the UK economy and it is our mission at Aldermore that we do everything we possibly can to help them succeed during this time of uncertainty.”

The full customer criteria can be found on our website: https://www.aldermore.co.uk/intermediaries/asset-finance/coronavirus-business-interruption-loan-scheme-cbils/