For micro or small enterprises

If you have fewer than 50 employees and less than £9 million in annual turnover and/or annual balance sheet total (as per your last approved annual accounts, or an estimate for the financial year if you don’t yet have approved annual accounts), then you’re an ‘undertaking in difficulty’ if:

  • You are subject to collective insolvency proceedings, which are any of the following:

    • Winding-up by or subject to the supervision of the court;

    • Creditors' voluntary winding-up (with confirmation by the court).

    • Administration, including appointments made by filing prescribed documents with the court;

    • Voluntary arrangements under insolvency legislation; or

    • Bankruptcy or sequestration.

  • You are in receipt of:

    1. Rescue aid (which has not been repaid); or

    2. Restructuring aid (and are still subject to a restructuring plan).

If you’re not an undertaking in difficulty as per the above criteria at the date of this application, then you can answer ‘no’ to this question. 

For everyone else

If you have at least:

  • 50 employees; and/or

  • £9 million in annual turnover and/or annual balance sheet total (as per your last approved annual accounts, or an estimate for the financial year if you don’t yet have approved annual accounts)

The criteria is that you were an ‘undertaking in difficulty’ on 31 December 2019- but the criteria for an undertaking in difficulty is different, see below. 

How do I know if I'm 'undertaking in difficulty'?

In a nutshell: if your business didn’t face financial problems until the crisis, you’re probably not. Below we have described the 4 tests for determining whether you were an ‘undertaking in difficulty’.

Was your business still making a loss as of 31 December 2019

Specifically, you're an 'undertaking in difficulty' if your accumulated losses add up to more than half of:

  • Your subscribed share capital, if you’re a limited company.

  • Your capital, if you’re an unlimited liability company.

Note: This criteria doesn't apply if your company has fewer than 250 employees and is less than 3 years old.

Have you entered into insolvency proceedings?

  • We’ve described ‘collective insolvency proceedings’ above. 

Have you had a bailout before?

You're technically an 'undertaking in difficulty' if you’ve had rescue aid before and not paid it back yet, or restructuring aid and you're still on the plan.

Do you know your debt to equity ratio?

We call these 'solvency ratios': how much you owe versus how much you're worth as a business.

If your company has fewer than  250 employees – in other words, if you're not classed as a 'small to medium sized enterprise' – these ratios have an impact on whether or not we can lend to you. That's because technically you're 'a business in difficulty' if, for the previous 2 years:

  • Your book debt to equity ratio is above 7.5; and

  • Your EBITDA interest coverage ratio was below 1.0.

You need both those things to be true to be 'in difficulty'. (But it doesn’t apply to companies with fewer than 250 employees.)

'Undertaking in difficulty' is defined in Article 2(18) of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty. - We've provided the extract here.

If you're still not sure, just get in touch: give us a ring on 020 3778 0274 and we'll talk it through.