Posted: Fri 3rd Apr 2020
_*** The Coronavirus Business Interruption Loan Scheme is now closed to new applications. It has been replaced by the Recovery Loan Scheme which launches on 6 April 2021 ***
Full details for the government's Coronavirus Business Interruption Scheme (CBILS), that provides lending to help businesses deal with the impact of COVID-19, have been announced. Here's everything you need to know._
Originally announced by the chancellor in the 2020 Budget, CBILS can provide facilities of between £50,000 and £5m for small and medium businesses across the UK experiencing lost or deferred revenues and disruptions to their cashflow.
The scheme is delivered by the British Business Bank through more than 40 accredited lenders including the main High Street banks. It has an initial £1.2bn of government-backed funding but the government announced it will be demand-led and will be resourced accordingly.
The Coronavirus Business Interruption Loan Scheme is open until 31 March 2021.
*** The Coronavirus Business Interruption Loan Scheme is now closed to new applications. It has been replaced by the Recovery Loan Scheme which launches on 6 April 2021 ***
The 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'.
Loans from £50,000 to £5m: The maximum value of a facility provided under the scheme is £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: Lenders will pay a fee to access the scheme.
No personal guarantees for loans under £250,000: Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, at a lender's discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility
Interest and fees paid by government for 12 months: The government covers the first 12 months of interest payments and any lender-levied fees meaning no upfront costs and lower initial repayments for small businesses.
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: Insufficient security is no longer a condition to access the scheme. For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment.
Remember that the borrower always remains 100% liable for the debt.
Smaller businesses from all sectors can apply for the full amount of the facility.
To be eligible for a facility under CBILS, a small or medium sized business must:
Be UK based in its business activity
turnover of no more than £45m per year
have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
self-certify that it has been adversely impacted by the coronavirus
When you apply for a business loan, most lenders will ask you for the following:
The amount you would like to borrow
What the money is for — the lender will check that it's a suitable business purpose and the right type of finance for your needs
The period over which you will make the repayments — the lender will assess whether the loan is affordable for you
You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:
Cash flow forecast
Details of assets
The above requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.
CBILS is available through the British Business Bank's 40+ accredited lenders and partners which are listed here. You apply by contacting the providers direct.
The lenders include High Street banks, challenger banks, asset-based lenders and smaller specialist local lenders.
Please only apply through the accredited organisations listed. Some unaccredited businesses have been set up which are charging businesses extra fees.
CBILS supports a wide range of business finance facilities, including:
There is a big demand for facilities so the following is recommended:
Consider applying via the lender's website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquires due to social distancing
Consider the urgency of your need. It is possible that some businesses may be looking for regular longer-term finance rather than 'emergency' finance, and there may other businesses with a more urgent need to speak with a lender
If one lender turns you down, you can still approach other lenders within the scheme
The Coronavirus Business Interruption Loan Scheme is open until 30 November 2020.
Smaller businesses seeking amounts under £50,000 may wish to apply for a loan through the Bounce Back Loan Scheme.
You can see more guindance on the Coronavirus Business Interruption Loan Scheme for small businesses here.
For the latest information on how to access all of the government's coronavirus business support, read this post.
You can also find details on Enterprise Nation's coronavirus business advice hub and by following Enterprise Nation on Twitter.