The economic scenario of the UK has suffered a terrible set back due to COVID 19 pandemic, akin to the rest of the world. As we write this page, the total number of COVID positive cases in the UK stands to the tune of 2,88,000 with 44,650 deaths being registered to date. While this the figure on the medical front, the figures on the economic front are no rosier.
As per the latest economic data, the economic activity in the UK shrunk by 20.4% in April, which is the steepest fall ever recorded since the second world war. Coupled with the decline in growth during the first quarter of 2020, the COVID 19 crisis has driven the UK economy down to the tune of 25% till April. However, following the easing of the lockdown on and from 15th June, the economy is showing slight signs of rising. While 79% of the UK businesses have continued with their operation, further 9.3% has resumed the operation following the ease of the lockdown period.
However, way back on 17th March 2020, the Chancellor of the Exchequer, Mr. Rishi Sunak had announced a new COVID 19 Corporate Financing Facility (CCFF), designed to help the larger, the financially more sound companies that have suffered due to the economic disruption triggered by the spread of the epidemic.
Thus, it is the responsibility of the professional accountants in Grazeley who are working on the behalf of various financial institutions to explain to their clients the efficacy of this scheme and how the companies are going to benefit from this scheme. That is where we at Biz Accounting Solutions Ltd make the difference. Our highly competent accountants are more than ready to provide detailed inputs of this scheme to our clients.
The objective of this Scheme
Nevertheless, let us on this page, discuss the efficacy and effect of this scheme. The CCFF is designed to support businesses that are looking for market-based finance to boost their surging working capital and to meet various short needs, much due to the compressed cash flow resulting from the economic meltdown.
While further details about the scheme are still not out, the Bank of England has already set in broader terms, the way the scheme will work and the businesses that are eligible to get the support. Here again, it is the responsibility of the accountants in Reading to find out whether their clients are eligible for the scheme or not.
How will the CCFF Function?
The Bank of England has come up with the Corporate Financing Facility Limited (the Fund), which is designed to purchase the Commercial Paper (CP) maturity of up to one year, which are issued by firms. The Fund is supposed to purchase the newly issued CP on the primary market, through the dealers and after the issuance from the eligible counterparts of the secondary market. The purchases, however, will be financed by the central bank reserves.
What is the tenure of the availability of CCFF?
The CCFF is designed to be valid for a minimum period of 12 months and will continue to be in use until the cash flow pressure of the eligible companies does not ease out. However, a six-month notice period will be served to the companies, before the withdrawal of this facility.
Who will issue the CP?
The fund will purchase the CP that is issued by the companies, which make a material contribution to the UK economic activities, and used to enjoy a short or long term investment grade rating before the pandemic struck, or those who had a financial strength equal to the investment-grade rating.
The company eligible to issue the CP:
- Has to be a substantial employer in the UK
- Has to be headquartered in the UK
- Has to be incorporated in the UK
- Has to serve a substantial amount of revenue in and for the UK
- Serves customers of the UK
- Has multiple operating sites in the UK
Thus, you see, there are so many modalities to be realised by a business in regards to its eligibility to enjoy the CCFF scheme. This is where hiring Biz Accounting Solutions Ltd will make a difference. Our accountants in Earley will leave no stones unturned to explain the technicalities of CCFF and other aspects to our clients. For further details, call us at +44 7877224964/0118 367 1854.