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How to access the Coronavirus Business Interruption Loan Scheme

How to access the Coronavirus Business Interruption Loan Scheme
Dan Martin
Dan Martin
Freelance content creator & event host
Dan Martin Content & Events

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 It has been replaced by the Recovery Loan Scheme which launches on 6 April 2021 ***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 It has been replaced by the Recovery Loan Scheme which launches on 6 April 2021 ***

Coronavirus Business Interruption Loan Scheme features

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.

Eligibility criteria

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

What CBILS lenders need from you

When you apply for a business loan, most lenders will ask you for the following:

Details of the loan

  • 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

Support documents

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:

  • Management accounts

  • Cash flow forecast

  • Business plan

  • Historic accounts

  • 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.

How to apply for Coronavirus Business Interruption Loan Scheme

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:

  • Term loans

  • Overdrafts

  • Asset finance

  • Invoice finance

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.

The latest coronavirus support information

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.

 
Dan Martin
Dan Martin
Freelance content creator & event host
Dan Martin Content & Events
 
I'm a freelance content creator and event host who helps small businesses and the organisations that support them. I have 18 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from billionaires like Sir Richard Branson to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I'm based in Bristol where I run and host regular events with the local small business community and have strong connections to major business organisations in the south west region. In total, I've hosted over 50 events; from intimate meet-ups to conferences with an audience of hundreds including events for international brands like Facebook and Xero. I'm also a big fan of podcasts having hosted Enterprise Nation's Small Business Sessions as well as lots of online events including Facebook Live interviews, webinars and three live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography. I'm here to help. I'm volunteering free advice calls of up to an hour as part of the Recovery Advice for Business scheme, over the next 6 months. Please get in touch to see how I can help your business.