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SMEs have clearly landed on the “nice” list this Christmas. As the impact of the pandemic still continues to affect businesses across the UK, particularly those businesses located in areas under greater restrictions, Rishi Sunak, the Chancellor of the Exchequer, delivered a welcome early Christmas present on 17 December 2020 in the form of further extensions to the Government’s three Coronavirus lending schemes (Schemes). The end date for each of the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and the Bounce Back Loan Scheme (BBLS) [1] will now be 31 March 2021, meaning more businesses will have more time to benefit from the Schemes and access the finance they may need. This support will be vital as the economic impact of the recently imposed tier system on the UK means that some businesses will potentially face the first few months of the new year with reduced or no revenue. 

The extensions come prior to the Budget, which Mr Sunak has confirmed will take place on 3 March 2021. The Government has previously announced that it is working on a successor loan scheme for SMEs (to replace the Schemes) which will be available after March 2021, and Mr Sunak will hopefully provide further details of this new scheme and any further measures of wider economic support for businesses at the Budget.

As the Government did not announce an extension to the Future Fund (the Government scheme for UK start-ups), it is therefore expected that this scheme will close for new applications on 31 January 2021.

Tis the season to be (thankfully) generous to SMEs

The Bank of England (BoE) also donned its Santa hat on 17 December 2020 and announced an extension to its Term Funding Scheme with additional incentives for SMEs (TFSME). The TFSME offers term funding at or very close to Bank Rate and was launched in March 2020 to respond to the COVID-19 crisis. The BoE has agreed a six month extension of the TFSME to ensure it can continue to deliver its objectives, an important one of which is to provide additional incentives for banks to support lending to SMEs, which typically bear the brunt of contractions in the supply of credit during periods of heightened risk aversion and economic downturns. The extension will cover both the Drawdown Period which will now run until 31 October 2021 (extended from 30 April 2021) and the Reference Period which will run from 31 December 2019 to 30 June 2021 (extended from 31 December 2020) of the TFSME. All TFSME participants will automatically be included in the extension unless they notify the BoE that they will be opting out. Further information on the TFSME can be found on the BoE website (see here).

Latest lending figures

According to the latest figures published by HM Treasury on 13 December 2020, the Schemes have now lent over £68 billion to more than 1.5 million businesses. This can be broken down as follows:

  • Over 1.4 million enterprises have received £43.5 billion from BBLS. This includes more than 62,000 businesses which opted to “top-up” their BBLS loans to the full £50,000, or a maximum of 25 per cent of their turnover, if lower, available through the BBLS scheme;

  • More than 82,000 businesses have secured facilities totalling £19.6 billion through CBILS; and

  • 675 larger businesses have accessed almost £5 billion through CLBILS.

According to UK Finance, this level of assistance is unprecedented and has helped keep businesses running in all sectors of the UK economy during the pandemic.


The news of the extensions to both the Schemes and the TFSME will, no doubt, have businesses breathing a deep sigh of relief. Although this means those businesses will have had the benefit of Government support for nearly a year, it may just be a sticking plaster over bigger concerns, such as whether businesses will be able to repay their loans and the high risk of fraud (organised criminals have been targeting the Schemes (especially BBLS) by criminals submitting fraudulent applications). It is suggested that up to £26 billion could be lost in loan defaults and fraud. However, as the sudden decision to place several regions of the UK into Tier 4 (the toughest level of restrictions) on 20 December 2020 has caused businesses even more frustration and despair, especially for those which have had to (temporarily) close their doors, perhaps kicking the can down the road and putting off the inevitable for a few more months is a blessing in disguise. 

 And to all SMEs a good night sleep.


[1] CBILS, CLBILS and BBLS were due to close on 31 January 2021 having recently been extended from 30 November 2020. See our previous update here.

If you require further information about anything covered in this briefing, please contact Suzanne Conticelli, or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, December 2020

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