British Business Bank

British Business Bank confirms changes to 'undertaking in difficulty' guidance

The British Business Bank has confirmed changes to ‘undertaking in difficulty’ guidance for businesses applying for CBILS and CLBILS.

It allows for the ‘undertaking in difficulty’ assessment to be determined at the date of application for the loan schemes. 

Businesses that were ‘undertakings in difficulty’ on 31st December 2019, but for which this no longer applies, will now be (in principle) eligible for the government-backed loans.

Previously, businesses had to demonstrate that they were not under this status as of 31st December 2019 to be eligible. 

The definition of ‘undertaking in difficulty’ includes businesses that:

  • had accumulated losses greater than half of their subscribed share capital (for limited liability companies) or capital (for unlimited liability companies)
  • had entered into collective insolvency proceedings or fulfilled the criteria to be put into collective insolvency proceedings
  • had previously received rescue aid that was yet to be reimbursed or (in the case of a guarantee, terminated)
  • had received restructuring aid and were still under a restructuring plan
  • had (where the undertaking is not an SME) fallen below the required solvency ratios for the previous two years.

The flexibility allows businesses to take action to convert their debt to shares in order to qualify for the schemes.

This gives them the option to restructure their finances before application so they may become eligible. 

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