Crowd for Angels has welcomed planned changes to the coronavirus business interruption loan scheme (CBILS), which will enable smaller, fast-growth companies to apply to the scheme.
Businesses are currently only able to apply for a CBILS loan if they are based in the UK, generate half of their sales from this country, have annual revenues of under £45m and can demonstrate they are not a “business in difficulty”.
Firms are excluded from the scheme if they have been put into insolvency proceedings or received restructuring aid.
“For smaller, fast-growth companies this may be crucial in them being able to access the loan scheme,” the crowdfunding platform said.
If they are a limited company, they must not have accumulated losses of more than half of their subscribed share capital, which Crowd for Angels said is common in small, high-growth companies. Under the existing criteria, any business classified this way is not eligible for CBILS, although firms less than three years old are exempt from that restriction.
“However, it meant that older companies still investing in growth may not have been able to apply, even though they still had a good business proposition and banks might have considered them for lending outside of the scheme,” Crowd for Angels said in a blog on its website.
After recent EU changes in state aid law relating to the “undertaking in difficulty” test, the British Business Bank is planning to amend its CBILS application criteria.
The state development lender is set to change “undertaking in difficulty” rules and remove the requirement of limited companies not having accumulated losses of more than half of their subscribed share capital.
And the bank will also soon ensure that smaller businesses with less than £9m in annual turnover and fewer than 50 employees will not be considered as in difficulty.
Therefore, Crowd for Angels said it’s likely that from the end of the month lenders may be able to offer CBILS to a wider range of businesses which had previously been unable to access the scheme, such as smaller, fast-growth companies.
“Crowd for Angels welcomes the changes and expects to see further acceleration of lending under the CBILS scheme in the coming months,” the platform said.
This month, Crowd for Angels announced that is allowing firms to raise investment for a different government emergency loan scheme, the future fund, on its platform, with investors able to put the money into an Innovative Finance ISA.