Anonymous written submission (CVT0003)

 

 

April 2020

 


 

REF: Eligibility criteria for the Coronavirus Business Interruption Loan (CBILS)

 

Dear Madam or Sir,

  1. We are writing on behalf of a small business based in the UK. We are both directors, part-owners and employees of the company.  Our client base is >95% non-UK (>90% non-EU).
  2. As is the case for the whole nation and others around the world, we have already started to feel the impact of the COVID-19 pandemic in that we have delayed payments from several countries that are in lockdown, as well as an overall reduction in orders and in how much we can achieve working from home. We have, therefore, approached our bank (HSBC) to enquire about the government scheme to support SMEs and to apply for a term-loan under this scheme.
  3. The definition on the British Business Bank (BBB) website and dedicated webpages of the eligibility criteria includes the following: ‘Be UK-based in its business activity’. This has been interpreted by our bank to exclude us, as our ‘income comes from abroad’.
  4. We understand that the UK Government would not support businesses based abroad, even if registered in the UK and we also understand that this definition is meant to include UK operations of non-UK registered businesses, as opposed to 'UK-registered companies', but where does it leave all the UK-based and registered businesses, who happen to be exporters like us?
  5. We are based in the UK, , we pay tax in the UK and all our income from abroad is paid into our UK bank accounts and accounted for in our UK annual returns, this includes our branch office of a foreign (UK) entity abroad (1 employee), which is only a business unit of our UK company, not a separate entity. The exception being our subsidiary in the US (2 employees), which is a separate American entity and with which we run an intercompany account.
  6. We sent emails to the British Business Bank info email to ask for clarification on the definition and got several automated replies directing us to visit their website or to get in touch with our lenders, which we already did, several times, before getting in touch with them in the first place. We have applied for a loan with our bank and they have explained that we are not eligible given their interpretation of the eligibility criteria, but they also agreed that the definition needs clarifying.
  7. We have contacted the bank of England and they said they only deal with lenders, not borrowers. We sent an email to HM treasury for clarification and haven't heard from them yet. We contacted our local DIT representatives and they replied that they will refer our query to UK Export Finance and get back to us.
  8. We have raised this query with the Federation of Small Businesses, FSB, of which we are both members and are yet to hear from them.
  9. We have contacted our local authority and the local Business Growth Hub  who can’t understand how our bank interpreted that we are ineligible simply because our income comes from export sales and promised to escalate to the Legal Team of the Business Resilience Project.
  10. We have called and then written to the British Exporters’ Association (BExA), who informed us about this public inquiry of the International Trade Committee and advised us to write to you.
  11. We called various helplines, including the Business Support helpline on the gov.uk website.
  12. Finally, we have sent letters to the Department of Business, Energy and Industrial Strategy, to our local MPs and to the Chancellor of the Exchequer. Our local MP  replied via her Team to say she raised the matter with UK Finance, but they are yet to hear back from them.
  13. In the meantime, we are in a situation whereby we don’t know if there will be support for us. We are a viable business and we are still trying our best to carry on working remotely, but we have a strain on our cash flow already and our income might reduce significantly in the next few weeks and months.
  14. We would like, therefore, to request a clarification on the eligibility criteria; and if it is the case that exporting businesses do not qualify for the CBILS scheme, to have an explanation of the reasons for exclusion, especially in the light of the upcoming post-transition Brexit and the country encouraging export outside the UK and the EU.

 

Please let us know should you have any queries or questions and we look forward to hearing from you.

 

 

 

 

 

April 2020