Publication - Advice and guidance

Coronavirus (COVID-19): liquidity support for SME housebuilders

This emergency loan fund supports small and medium-sized housebuilders with liquidity issues due to the temporary closure of the housebuilding sector as a result of COVID-19.

Published:
7 May 2020
Coronavirus (COVID-19): liquidity support for SME housebuilders

A £100 million emergency loan fund has been created to support small and medium-sized (SME) housebuilders with liquidity issues due to the temporary closure of housebuilding sites.

The fund is open to applications from existing  SME housebuilders  registered in Scotland and complements existing COVID-19 support schemes. The fund aims to:

  • safeguard jobs and protect suppliers
  • ensure a continued supply of homes
  • support post-COVID-19 economic recovery, and
  • retain diversity within the housebuilding sector.

Who can apply?

SME housebuilders which can demonstrate that:

  • they are a non-public organisation that have a business registered in Scotland which has been directly affected by COVID-19
  • they complete five or more homes in Scotland per annum
  • their annual turnover is less than £45 million
  • their business was financially viable before COVID-19
  • funding cannot be secured from existing private banks or other financial institutions or from their own resources to meet liquidity needs, and
  • the business has attempted to secure funding from the Scottish Government, UK Government or other public sector COVID-19 schemes before they have applied to the fund.

How much funding is available and on what terms?

The fund will offer short-term loan funding to applicants to cover COVID-19 liquidity support to their business. Key features include:

  • loans of between £50,000 to £1 million, which will normally be limited to a maximum of 25% of annual turnover
  • fixed interest rates of 2% per annum, and
  • flexible repayment terms, with the option for capital and interest payments to be offset for 12 months – the majority of loans are expected to be repaid within 24 months.

Providing security will help reduce the risk profile of loan funds for the Scottish Government

How to apply

Applicants should complete an application form below containing the following information:

  • Details of the company structure, ownership and directors
  • A copy of the company’s last audited accounts
  • Information on how COVID-19 has had a direct impact on the business
  • The amount of funding being sought, and what it will be used for 
  • Company cashflow, including COVID-19 related costs and repayment profile. Template is provided in the application form.
  • What security can be offered (if any)
  • Details of the company’s existing lenders and securities
  • Bank details (applicants will be asked to provide a copy of a recent bank statement that is less than three months old and shows the account name, sort code and account number) – an authorised signatory, for the company, should sign this as a true copy
  • Details of efforts to secure funding from other private or own business sources
  • Details of attempts to secure funding from the Scottish Government, UK Government or other public sector COVID-19 schemes, alongside evidence of whether these attempts were successful
  • Confirmation that the business was not in difficulty before COVID-19 for state aid compliance.

Completed applications should be returned to the fund mailbox at SMELiquidityFund@gov.scot and should be sent from a business email address.

Please provide all documentation as an email attachment under 20MB or alternatively as a download link (for instance: Drop Box).  Any documentation requiring a signature should be signed by an authorised signatory of the company.  These can be signed electronically (scanned or typed signature).

An automated email will be sent to acknowledge receipt of the application.

Applications which are not fully completed will not be considered and will be returned with an invitation to re-apply. Re-submissions will be treated as new applications.

We aim to advise applicants of the outcome of the assessment within 10 working days.  In some cases we may require additional information and we will contact you to request this – please note however that this may impact on the timescale for assessing your application. 

Important information

If an application is successful, it is recommend that appropriate legal advice is pursued.

Sub-contractors cannot apply for costs claimed through the application.

Financial information should match the spreadsheet cash flow template that the applicant is required to complete as part of the application form and is available to download at the bottom of this page.

Details of how the loan will be repaid must be provided and included in the cashflow.

Where available, evidence of a funding awards or declines from private and public funding sources should be submitted with your application.

Only one application will be accepted per company or group, regardless of the number of branches, subsidiaries or parent bodies.

The Scottish Government will undertake a company credit check using a Dunn & Bradstreet report and reserves the right to undertake further credit checks if required.

The Scottish Government will assess the application and will decide the appropriate level of funding that can be supported – this level may be lower than your requested amount.

The Scottish Government shall ensure that all requirements of the Data Protection Laws are fulfilled in relation to the Project/Programme.

Applications will be subject to the requirements of the Freedom Of Information (Scotland) Act 2002 and the Environmental Information (Scotland) Regulations 2004 and subsequent amendments.

The Scottish Government may use some information from your application form for the purpose of research and statistical analysis in accordance with section 2(2) (r) of the Housing (Scotland) Act 1988.     

The Scottish Government will publish details of awards made by the fund including the organisation name and the level of loan approved. Details of the awards will also be published on the European Commission Competition database.

State aid

Confirmation of state aid received under the COVID-19 Temporary Framework for UK Authorities measure and Undertaking in Difficulty Status

Following the outbreak of the Coronavirus, the European Commission has approved schemes to aid businesses affected by the Coronavirus outbreak on the basis of its Temporary Framework, including the COVID-19 Temporary Framework measure for the UK. The maximum level of aid that a company may receive is €800 000 (€120,000 per undertaking active in the fishery and aquaculture sector or €100,000 per undertaking active in the primary production of agricultural products). This is across all UK measures under the terms of the European Commission’s Temporary Framework.

(Please note: the state aid value for the SME Housebuilders Liquidity Loan Fund is calculated on the interest foregone on loans, taking account of collateralisation and credit worthiness of applicants. The aid value will be provided with any loan offer made).

Provide details of any other funding your business has received

In your application you are required to declare any aid already approved under the Temporary Framework. The Euro equivalent of the Sterling aid amount is calculated using the Commission exchange rate applicable on the date the aid is offered. 

Any aid provided under this measure will be relevant if you wish to apply, or have applied, for any other aid based on the European Commission’s Temporary Framework.  You will need to declare this amount to any other aid awarding body which requests information from you on how much aid you have received.  You must retain the award letter for four years after the conclusion of the UK’s transition from the EU and produce it on any request from the UK public authorities or the European Commission.

Aid may be granted to undertakings that were not in difficulty (within the meaning of Article 2(18) of the General Block Exemption Regulation on 31 December 2019), but that faced difficulties or entered into difficulty thereafter as a result of the COVID-19 outbreak. This aid is in addition to any aid that you may have received under the De Minimis regulation allowing aid of up to €200,000 to any one organisation over a three fiscal year period (i.e. your current fiscal year and previous two fiscal years), and any other approved aid you have received under other state aid rules, such as aid granted under the General Block Exemption Regulation.

Undertakings in Difficulty Assessment

Source: Section 2(18) General Block Exemption Regulations

In your application you will be asked to declare that on 31 December 2019, you did not meet any of the criteria to be considered an undertaking in difficulty.

2 (18) ‘undertaking in difficulty’ means an undertaking in respect of which at least one of the following circumstances occurs:

(a) In the case of a limited liability company (other than an SME that has been in existence for less than three years or, for the purposes of eligibility for risk finance aid, an SME within seven years from its first commercial sale that qualifies for risk finance investments following due diligence by the selected financial intermediary), where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital. For the purposes of this provision, ‘limited liability company’ refers in particular to the types of company mentioned in Annex I of Directive 2013/34/EU (1) and ‘share capital’ includes, where relevant, any share premium.

Or

b) In the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has been in existence for less than three years or, for the purposes of eligibility for risk finance aid, an SME within seven years from its first commercial sale that qualifies for risk finance investments following due diligence by the selected financial intermediary), where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses. For the purposes of this provision, ‘a company where at least some members have unlimited liability for the debt of the company’ refers in particular to the types of company mentioned in Annex II of Directive 2013/34/EU.

And

(c) Where the undertaking is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors.

And

(d) Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee or has received restructuring aid and is still subject to a restructuring plan.