The extent of the contagion arising from the coronavirus pandemic shifts daily. Now almost two months since the UK locked down, the impact on business and specific sectors is becoming clearer as actual economic data comes forward. The housebuilding sector has been particularly impacted with sites being shut down, revenues curtailed and large numbers of staff furloughed. When lockdown is relaxed, restarting sites will not happen overnight; breathing life into the market may take rather longer.
The support mechanisms from the UK and devolved governments introduced in late March and early April placed many businesses on a more stable footing, but not all. Why, will no doubt become apparent over time. However, in Scotland, the Scottish Government has recognised that, in addition to the various support mechanisms for businesses the housebuilding sector, and small and medium-sized businesses in particular, needs additional and special support.
This comes in the form of an Emergency Loan Fund for Small and Medium-sized Housebuilders. As of Monday 18th May fund applications can be made for loans of £50,000 to £1,000,000. Eligibility criteria are similar, but not identical to, the Coronavirus Business Interruption Loan Scheme promulgated by the UK Government.
The basic criteria are that the business must:
- Be an existing business in Scotland
- Be directly affected by Covid-19
- Have a turnover of £45 million or less per year
- Build 5 or more homes per year
- Have been financially viable pre-Covid-19
- Be unable to secure funding from existing lenders or own resources
- Be unable to secure sufficient funding from existing support mechanisms
Interest will be charged at 2% per annum albeit capital and interest repayments may be postponed for 12 months. It is expected this emergency funding will be repaid within 2 years. Scottish Government will assess security requirements on a case by case basis.
Here is a link to the Scottish Government’s web page setting out what is involved.
As with all of the support mechanisms which have been introduced by the UK and Scottish Governments, the key has to be quick decision making and ensuring cash is paid out promptly.