X

Contact Kirk Rice

Kindly complete the form below to send an enquiry. Your message will be sent to one of our Accountants or Financial Planners who will respond to you within 24 hours.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service
X

Request Appointment

Please complete this form to request an initial appointment at our cost.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service
X

COVID-19 Information Hub

Coronavirus Corporate Financing Facility – Support for larger firms

In his announcement on Friday 20 March, the Chancellor significantly extended the government-backed loan guarantee scheme revealed in the Budget to address the cash flow issues faced by businesses. The government will now provide loan guarantees up to “an initial” £330 billion for all sizes of businesses. The bulk of this vast figure will be through this facility aimed at larger businesses. Please read on for a summary of advised issued by the government and our own supplementary commentary, analysis and guidance.

Updated 23/03/20

Government guidance:

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.

This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.

It will also support corporate finance markets overall and ease the supply of credit to all firms.

Eligibility

All UK businesses are eligible.

How to access the scheme

The scheme will be available early in the week beginning 23 March 2020.

We will provide information on how to access the scheme here shortly.

More information is available from the Bank of England.

Kirk Rice commentary:

The Bank of England is launching a Covid Corporate Financing Facility (CCFF), which “will provide funding to businesses by purchasing commercial paper of up to one-year maturity, issued by firms making a material contribution to the UK economy”.

No real guidance has yet been issued as to what constitutes ‘material contributions’, but this is most likely to include significant employee numbers, UK revenue and tax payments, and playing an essential part in a vital supply chain. In practical terms, this will only be applicable to large companies (>£41m turnover), whose debt can be listed and traded. This will most likely cut out all SMEs.

Companies applying must be able to demonstrate that as at 1 March 2020, they were investment grade. Financial companies (institutions) are not eligible to apply. Commercial Paper issued by leveraged investment or private equity funded vehicles or from companies within groups that are predominantly banks, investment banks or building societies will not be eligible. If a finance subsidiary is issuing securities, it should be guaranteed by its parent company.

Commercial paper is an unsecured, short-term debt instrument issued by a company.

CCFF will purchase sterling-denominated commercial paper, with the following characteristics:

Maturity of one week to twelve months
Where available, a credit rating of A-3 / P-3 / F-3 from at least one of Standard & Poor’s, Moody’s and Fitch as at 1 March 2020.
Issued directly into Euroclear and/or Clearstream

Non-standard features such as extendibility or subordination will not be acceptable.

If you wish to discuss this further, please speak to contact info@kirkrice.co.uk to arrange a call.

We’ll be updating this page for the answers as and when they become available, so please, do check back regularly for further information.

 

Got a question? Ask us using the form below.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service