Recovery Loan Scheme & Budget Briefing

At the beginning of the month, Rishi Sunak announced the launch of the Recovery Loan Scheme, which will replace the CBILS and Bounce Back Loans as they come to an end on 31st March. Below is an overview of the new scheme as well as key highlights from the budget.

Recovery Loan Scheme

Businesses of any size can apply for loans between £25k and £10m, with the government providing an 80% guarantee to lenders. Funds can be applied to any legitimate business purpose (including cash flow management, growth and investment).

What types of financing are available:

  • Term loans & overdrafts: £25k-£10m per business with terms up to 6 years
  • Invoice finance & asset finance: £1k-£10m per business with terms up to 3 years

No personal guarantees will be taken on facilities up to £250k, and a borrower’s principal private residence cannot be taken as security.

When: 6th April to 31st December (subject to review)

Eligibility: your business:

  • is trading in the UK
  • is viable or would be viable were it not for the pandemic
  • has been impacted by the coronavirus pandemic
  • is not in collective insolvency proceedings

There is no turnover restriction for businesses to access the scheme. Businesses that have received support under the existing C19 schemes are still eligible.

How to apply: Businesses will be able to apply from a list of accredited lenders, whose names will be made public in due course. We will aim to provide updates in our Forward Fortnightly as more information becomes available.

The Budget Briefing:

Economic overview

  • The UK economy is forecast to return to pre-Covid levels by the middle of 2022.
  • Annual growth is set to rebound by 4% this year, followed by a 7.3% growth in 2022.
  • Unemployment is expected to peak at 6.5% next year, which is much lower than the 11.9% previously predicted.
  • The new UK Infrastructure Bank, based in Leeds, will be set up with an initial capitalisation of £12bn.
  • A new set of UK schemes called Help to Grow will include projects to support people in receiving management training, as well as oversee the training of small business in digital skills.
  • £1.6bn is being invested to support the vaccine roll-out programme.
  • New freeports will make it easier and cheaper to do business. The eight regions selected to be freeports are the Humber, East Midlands Airport, Felixstowe and Harwich, Liverpool City Region, Plymouth, Solent, Thames, and Teesside.

Income tax

  • The basic personal allowance threshold will rise to £12,570 next year.
  • For higher-rate payers, the threshold will be £50,270.
  • Both rates will be frozen until 2026.

Corporation tax

  • Corporation tax on company profits will increase to 25% in April 2023 for companies with profits over £250,000.
  • The new Small Profits Rate means that businesses with profits of £50,000 or less will still only pay 19% corporation tax.

Furlough scheme

  • The furlough scheme is being extended until the end of September 2021.
  • There’s no change to the terms for employees, as they will continue to receive 80% of their salary for hours not worked.
  • As businesses reopen, they’ll be asked to make a 10% contribution to furlough after July and 20% in August and September.

Business rates holiday

  • The business rates holiday will be extended through to the end of June.

VAT

  • The reduced VAT rate of 5% will be extended for six months to 30th September, followed by an interim rate of 12.5% for a further six months.
  • The standard rate will not return until April 2022.
  • The VAT registration threshold will remain at £85,000 until 2024.

Support for the self-employed

  • The SEISS grant will continue until September, with the fourth grant covering February to April and an additional fifth grant from May onwards.
  • Access to SEISS has been improved. Now that the tax return deadline has passed, providing that a self-employed person has already submitted a self-assessment tax return, they can now apply for the SEISS grant.

Retail, hospitality and leisure

  • A new Restart Grant will launch in April to help businesses reopen and get going again.
  • Non-essential retail businesses will receive grants of up to £6,000 per premises.
  • Hospitality and leisure businesses will get grants of up to £18,000 per premises.
  • A new £150m fund will allow communities to take ownership of pubs, theatres, shops and sports clubs that are at risk of closure.
  • The planned increase on alcohol duties has been cancelled.

Sport and Culture

  • Sporting, cultural and arts organisations will receive £700m to help them reopen.
  • The government promises to back the joint UK and Ireland bid to host the 2030 World Cup.

Fuel duty

  • The planned increase on fuel duty has also been cancelled.

Universal Credit

  • The existing £20 a week uplift to Universal Credit will continue for another six months until September 2021.

National Living Wage

  • The National Living Wage will rise to £8.91 from April 2021.

Apprenticeship incentive

  • The incentive given to businesses for taking on new apprentices has doubled to £3,000. This applies to all new apprentice hires of any age, not just those aged 25 and over.

Stamp Duty

  • The stamp duty holiday for house buyers has been extended by an additional three months, running until the end of June 2021. Purchases up to £500,000 will continue to be free from tax.
  • Homes bought up to a value of £250,000 will be free from tax until the end of September 2021.
  • First-time buyers can access a government guarantee on mortgages, seeing a return of 5% deposits.

Social support

  • A further £19m will be invested into the Domestic Violence Programme to reduce the risk of reoffending and providing support for vulnerable women.
  • An additional £10m will be made available to veterans with mental health needs.
  • There will be a lifetime commitment to victims of the thalidomide scandal, starting with a £40m down payment.

Katie is an Investor with Forward Partners. She came from Vanedge Capital, a VC investing in Series A companies globally. Their sector focuses include machine learning & AI, cloud computing, SaaS, digital media and cyber security. At Vanedge, Katie was responsible for deal sourcing, due diligence and portfolio company management.

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