Coronavirus Business Interruption Loan Scheme

[23.03.20]

  • 40+ accredited lenders and partners
  • Eligibility terms confirmed
  • Details released on how smaller businesses can apply for the scheme

The Coronavirus Business Interruption Loan Scheme (CBILS), announced by the Chancellor, today opens for applications. It can provide facilities of up to £5m for smaller businesses across the UK, who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

The scheme will be delivered by the British Business Bank, through 40+ accredited lenders and partners. A list of those accredited lenders and partners can be found here.

Scheme features

The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

  • Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
  • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
  • No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
  • Interest and fees paid by the Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
  • Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
  • Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
  • The borrower always remains 100% liable for the debt.

Eligibility criteria

Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME must:

  • Be UK based in its business activity, with turnover of no more than £45m per year
  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

How to apply

CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.

In the first instance, businesses should approach their own provider – ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.

At the start of the week 23rd March 2020, the press reported that a number of banks, including Barclays and HSBC were asking for Personal Guarantees from the Directors, to secure a CBILS loan. As of 27th March, we have been informed that Barclays, HSBC and Lloyds have all announced that any Director who secures a loan of up to £250k via the CBIL Scheme will not have to sign a Personal Guarantee. For loans upwards of this amount, Directors may still have to sign one.

Updated 12pm on 27th March 2020.

Castletons Accountants

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