CBILS by Neil Buckley

CBIL Key Features

Who will provide the loan?

There are now over 40 accredited lenders providing the loans, including all the high street banks: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/



Amount of Loan Available

• In theory, up to £5m. However, in reality, lenders will look to provide loans that are realistic for the needs of each individual business.

• The amount may need to be verified by way of a cash-flow forecast or other supporting information



Cost of the Loan

• Interest rate:

-12 month’s interest free period plus up to 12 months capital repayment holidays

- Normal commercial interest rates will apply from lender to lender

• The government will cover all up-front fees (arrangement fees) the lender may charge



Term of The Loan

• Finance terms of up to six years are available for loans and asset finance facilities.

• For overdrafts and invoice finance facilities, the loan terms will be up to three years.



Security To be Provided For The Loan

• 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance after realisation of any security taken.

• Unlike the existing similar schemes such as the EFGS , there will be no additional fee charged by the government for its guarantee.

• Loans <£250,000: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under.

• Loans >£250,000: Lenders 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.



We anticipate that some lenders will look to take some form of additional security depending on the amount and this may involve Personal Guarantees and/or a debenture.



Liability of The Borrower

• The borrower always remains 100% liable for the debt

• The business proprietors may also be required to provide personal guarantees



Eligibility to Take a Loan From The Scheme

Smaller businesses from all sectors (with a small number of exceptions) 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 annual turnover of no more than £45m

• Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.

• Loans are limited to a maximum of 25% of 2019 turnover or double the annual wage bill, whichever is greater.



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

When can I get a CBILS supported loan

The scheme went live on Monday 23 March and will initially run for six months.



Is it my only option right now

Not at all. In fact, as the lender will pay a fee to access the scheme, if they can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.



Are other non CBIL lenders still open for business, can I still borrow money via regular routes

Yes, the majority of lenders are still open for business, although criteria has changed. There is still an appetite to fund investment property, bridging, commercial property, invoices and assets. Please get in touch to discuss your requirement.

The new CBILS scheme has many positive features at this difficult time for businesses but the reality is that obtaining the finance may be more involved and slower than has been reported in the press so we suggest businesses apply early.