Prior to the change, in order to meet the eligibility criteria of CBILS and CLBILS, businesses seeking support were required to satisfy (amongst other requirements) a requirement of EU state aid law and demonstrate that they were not an "undertaking in difficulty" as at 31 December last year.
An "undertaking in difficulty" includes business which have:
- accumulated losses in excess of 50% of their subscribed share capital;
- entered into collective insolvency proceedings or meet the criteria to enter such proceedings;
- previously received rescue aid which has not been repaid;
- received restructuring aid and are still under a restructuring plan; and/or
- fallen below the required solvency ratios for the previous two years.
The change which has been announced means that the assessment of whether or not a business is such an "undertaking in difficulty" can now be determined as at the date of the application for financial support under the government back schemes rather than as at 31 December 2019. As such, if a business was previously an "undertaking in difficulty" as at that date but no longer meets that test, that business may now be eligible for financial support from one of the accredited lenders under the schemes.