DWF logo

Search

DWF logo

            State aid and COVID-19: UK's Coronavirus Business Interruption Loan Scheme approved by European Commission

            Two newly approved UK State aid schemes comprising the Coronavirus Business Interruption Loan Scheme will allow the UK Government to provide loan guarantees for and direct grants to support SMEs during the COVID-19 pandemic. This has been approved by the European Commission following its newly adopted Temporary Framework for emergency State aid to business affected by the pandemic.

            Date: 26/03/2020

            On Wednesday 25 March 2020, the European Commission approved two separate UK State aid schemes to support SMEs during the COVID-19 pandemic. Both schemes were approved under the new State aid Temporary Framework adopted by the Commission on 19 March 2020. The Temporary Framework increases the scope for Member States to notify schemes of aid designed to mitigate the socio-economic impact of the Coronavirus outbreak.

            The newly approved UK schemes relate to the Coronavirus Business Interruption Loan Scheme (CBILS), a temporary fund announced by the UK Chancellor on Tuesday 17 March, designed to support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to six years. Funding under CBILS will be delivered through commercial lenders, backed by the government-owned British Business Bank. There are 40 accredited lenders able to offer the scheme, including all major banks. For more information on UK support measures available during the COVID-19 pandemic, please see our recent press release and for UK government guidance to businesses, please see here.

            The two approved schemes, which will initially run until 30 September 2020 with the possibility for the UK to extend them until 31 December 2020, will respectively allow the provision of:

            1. Guarantees covering 80% of loan facilities for SMEs with a turnover of up to £45 million for working and investment capital needs; and
            2. Direct grants to support SMEs affected by the Coronavirus outbreak for which the overall budget is £600 million.

            At this time the European Commission's decisions for SA.56792 and SA.56794 are not published, but we understand that it is likely there will be no sectoral limitations, beyond requiring the recipients to be SMEs.

            In deciding to grant approval to the measures, the Commission concluded that each proposed intervention is necessary, appropriate and proportionate to remedy a "serious disturbance in the economy" of a Member State, in line with Article 107(3)(b) of the EU Treaty (TFEU) and the conditions set out in the Temporary Framework. In particular, the direct grant scheme falls within the €800,000 of benefit limit per company as laid down by the Temporary Framework and the conditions of the guarantee scheme are also aligned with the Framework, including safeguarding measures to ensure the advantages are effectively passed on to the borrowers. For a more detailed breakdown of the parameters of the Temporary Framework please see our recent article.  Of course, recognising the urgency arising from the pandemic the European Commission is fast-tracking all Covid-19 related notifications.

            The Commission's approval of the UK schemes follows a series of approvals of similar schemes over the recent days by other Member States under the Temporary Framework, such as Spain, Germany and Luxembourg. This demonstrates the swift approach adopted by the Commission to responding to notifications of aid during this unprecedented time.

            We therefore expect that more approvals with be forthcoming over the next few days and weeks.

            If you need any further advice in this area do not hesitate to contact one of our experts.

            View more insights on our COVID-19 Global Hub

             

            DWF has a considerable depth of expertise in State aid law matters. We are able to draw upon a team of leading experts, in our UK, Brussels and other international offices, who have extensive experience in this area, including working within the UK Government on high profile funding matters, defending projects from recovery and designing projects to meet the rules. 

            Related people

            Jonathan Branton

            • Partner // Head of Public Sector // Head of EU Competition

            We use cookies to give you the best user experience on our website. Please let us know if you accept our use of cookies.

            Learn More

            Your Privacy

            When you visit any web site, it may store or retrieve information on your browser, mostly in the form of cookies. We mainly use this information to ensure the site works as you expect it to, and to learn how we can improve the experience in the future. The information does not usually directly identify you, but it can give you a more personalised web experience.
            Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change permissions. However, blocking some types of cookies may prevent certain site functionality from working as expected

            Functional cookies

            (Required)

            These cookies let you use the website and are required for the website to function as expected.

            These cookies are required

            Tracking cookies

            Anonymous cookies that help us understand the performance of our website and how we can improve the website experience for our users. Some of these may be set by third parties we trust, such as Google Analytics.

            They may also be used to personalise your experience on our website by remembering your preferences and settings.

            Marketing cookies

            These cookies are used to improve and personalise your experience with our brands. We may use these cookies to show adverts for our products, or measure the performance of our adverts.