The Bounce Back Loan Scheme (BBLS) enables smaller businesses to access finance more quickly during the coronavirus outbreak.
This Bounce Back Loan Scheme is designed for small businesses and is 100% government guaranteed to the lender, and is very easy to obtain. Any limited company or partnership can claim an interest/and admin cost free loan of up to 25% of their annual turnover, maximum £50k, subject to the business being solvent at the end of December 2019. This loan could give you added security against unforeseen events, over the next 12 months, interest and cost free, and can be repaid at the end of that period, by which time we hope that there will be no more uncertainty following the current crisis. If it cannot be repaid at that time it can be paid off over the next five years including a fixed interest charge of only 2.5% per annum. I learned about this through an FSB webinar.
You cannot claim if you are already claiming under one of the other covid related government schemes.
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
- COVID-19 Corporate Financing Facility
The BBLS scheme is tailored towards smaller companies and fills the gap which the terms of the above three schemes left.
INTERACTION WITH R&D TAX CREDITS
The interaction action of other State Aids with R&D claims is a complex area. It is best to seek professional advice case by case when weighing up the impact of decisions like taking any of these Government backed loans. An SME R&D claim is in itself a State Aid. Due to the level of this aid rules exist when combining it with other State Aids. I will make the following general points.
- These loans are generally for business support not R&D projects. If the loan does not impact an R&D project then the State Aid from the loan does not need to be considered when making an R&D claim.
- If all a company does is R&D, or it is a large proportion of its activity, then the State Aid will impact an R&D claim. But unlike other schemes mentioned the BBLS is being treated as a de minimis aid. So specific rules apply.
- The normal de minimis rules are covered in our FAQs. But due to the Covid crisis the limits on de minimis aid were changed by the EU Covid-19 Temporary framework. They are more generous. The aid remains de minimis, businesses do not have to self declare it as a State Aid, if since the 1st March 2019 they have not received £711,200 (€800,000) in de minimis aid.
- This is important because £1 of de minimis aid means that the de minimis element as qualifying expenditure in an R&D project can be claimed under RDEC. The rest of the project claimed under the SME R&D Tax Credit scheme. This is a positive as if the aid was a State Aid then £1 of that aid would mean the entire project expenditure could only be claimed under RDEC. RDEC is roughly worth 1/3 the amount of an SME claim.
- If a a business was a “business in difficulty” prior to 31st December 2019 the de minimis rules are applied differently. See the details here.
All things considered and knowing the relationship between overall activity and R&D activity for my clients I would be surprised if the BBLS loans had much impact on the level of R&D claims. If it does it will only impact a portion of a projects costs by taking them out of the SME scheme.
The bigger impact in these difficult times will be the lack of actual R&D work being done due to the isolation measures.
We believe in supporting UK business if you need any help with R&D claims please contact us.