Background
The Policy and Technical team continues to speak with treasurers to understand what issues they are facing and in what areas the ACT can help. We are also talking with the main banks to understand how they are responding to the COVID-19 crisis. At the same time, we have held a number of conversations with HM Treasury, the Bank of England, the CBI, the City of London Corporation and UK Finance. Through these forums we have been able to ensure that the views of the treasury community are heard by policymakers through a number of different channels.
A list of useful material from the ACT, the Regulators, the Government and Others can be accessed from the ACT Knowledge Hub - https://www.treasurers.org/hub/technical/covid19
HM Treasury update – 2021 Budget
In the 2021 Budget, it was announced that the CLBILS, CBILS and Bounce Back schemes due to expire on 31 March will be replaced by a new Recovery Loan Scheme. Under the RLS UK businesses of any size can apply for a loan or overdraft between £25,000 and £10m until the end of 2021. Asset and invoice finance between £1,000 and £10m will also be available. All will have a Government guarantee of 80 per cent.
Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance, terms will be up to three years. No personal guarantees will be taken on facilities up to £250,000 and, as before, a borrower’s principal private residence cannot be taken as security. The RLS opens April 6 and will run until December 31, subject to review. Like CBILS and the Bounce Back Loans, these will be available through a network of accredited lenders, whose names will be made public in the near future.
The CJRS furlough scheme has been extended until the end of September 2021.
The CCFF scheme
Taken from the Bank of England report, the following table provides some interesting insights (https://www.bankofengland.co.uk/markets/bank-of-england-market-operations-guide/results-and-usage-data).
As the graphs above show:
This confirms our conversations with treasurers that many are using their CCFF facility as a back-up programme and also many have been repaying debts ahead of key reporting periods.
Details of current borrowers under the facility can be found at https://www.bankofengland.co.uk/-/media/boe/files/markets/covid-corporate-financing-facility/cp-held-by-ccff-by-business.xlsx.
More information on the programme can be found under https://www.bankofengland.co.uk/markets/covid-corporate-financing-facility.
If you have questions you’d like raised with the Bank of England, please email technical@treasurers.org.
We continue to hear from firms that have been able to access the CCFF programme; we provide anonymised feedback to the Bank of England. If you’d like to share your experiences, please drop an email to technical@treasurers.org.
Other Schemes
Bounce back loans charge a flat 2.5% interest rates, while CBILS can charge anything up to 14.9%. The average rate for all CBILS loans is 5.1%.
The Bank has also made available details of the other schemes being made available (https://www.gov.uk/government/collections/hm-treasury-coronavirus-covid-19-business-loan-scheme-statistics#Coronavirus-Business-Interruption-Loan-Scheme ).
The data shows that:
Update from the UK institutions
HMRC has published the names of the 750,000 companies that have applied for furlough support. The list can be found here.
The FCA issued Market Watch 66 which set out its expectations for firms on recording telephone conversations and electronic communications when alternative working arrangements are in place, including increased homeworking.
The ONS produces a fortnightly analysis of business responses in a number of key areas. The latest report noted:
Cash reserves:
Trading activity:
Working conditions:
It should be noted that the survey population tends to be small businesses.
Feedback from Treasurers
The slight decrease in the number of active borrowers under the CCFF scheme reflects comments we have heard from treasurers who have reported repaying government loans and, in some cases, repaying furlough related payments they received.
Views from across the world
As a member of the International Group of Treasury Associations, and the European Association of Corporate Treasurers and working with our colleagues in the US National Association of Corporate Treasurers we are keeping an eye on developments overseas.
The EC issued a note to The Eurogroup Working Group on Corporate Solvency of European Enterprises. The note raises questions about solvency in the corporate sector once public sector support programmes that have been put in place throughout the pandemic start to be lifted and against the backdrop of a further tightening of credit conditions.
Some key trends observed
The note includes the following table:
Engaging with the treasury community
We welcome conversations with our members on:
Send an email to technical@treasurers.org and either James Winterton, Naresh Aggarwal or Sarah Boyce will be in touch with you.
If you have found any resources which you feel we should add to our COVID-19 site, please email us with details.
Naresh