Coronavirus Business Interruption Loan Scheme (CBILS)

Further support for businesses affected by Coronavirus

On 17 March 2020, the Chancellor announced £330bn of support for SMEs through the Coronavirus Business Interruption Loan Scheme (CBILS).

In practice the 40+ accredited banks charged with administering the scheme only started to receive substantive guidance regarding its deployment from around 23 March. They are having to rapidly climb a steep learning curve.

Businesses that have obtained debt finance
in the past will know that applying for loans has not historically been a quick process.
We understand the government’s intention with CBILS was to streamline this process
and accelerate credit decisions.

There have been reports in the press of the difficulty that businesses have experienced
obtaining funds from CBILS and, for those that are successful, the time taken to receive funds. Accordingly, from 6 April 2020, the scheme has been significantly expanded with changes to the scheme’s features and eligibility criteria meaning that more smaller businesses should be able to access the funding they need at this time. From our more recent discussions with banks, it would appear that an increased number of applications are now being successful. However, the success rate varies from lender to lender and it is too early to tell whether the changes announced will have the impact the government hoped for.

For those businesses that may be interested in CBILS, we set out a summary of the current scheme as follows:

  • A finance facility of up to £5 million in the form of one or more of a term loan, overdraft, invoice finance or asset finance.
  • The facility can be repaid over any period up to 6 years.
  • A Government guarantee which secures 80% of the CBILS facility to any viable business with a sound borrowing proposal, but which may lack adequate security. For the avoidance of doubt, the borrower remains 100% liable for the debt in the ordinary course of business.
  • No fee required for Government guarantee.
  • No loan arrangement fee or loan prepayment fee, should the business wish to repay early.
  • An interest free period of 12 months will apply.
  • No loan arrangement fee or loan prepayment fee should the business wish to repay early.
  • An interest free period of 12 months will apply.
  • No repayment of capital required during the period of 12 months from drawdown.
  • No personal guarantees required for lending 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 applying the proceeds realised from any business assets; and
    • a Principal Private Residence (PPR) cannot be taken as security under the scheme.
coronavirus impact on busienss FAQs
What are the eligibility criteria?
  • Have a UK-based business activity.
  • Have an annual turnover of no more than £45 million.
  • Have a borrowing proposal which the lender would consider viable, were it not for the coronavirus pandemic.
  • Self-certify that it has been adversely impacted by the coronavirus.
  • Not operating in the following sectors:
    • Banks, insurers and reinsurers (but not insurance brokers);
    • Public-sector organisations, including state-funded primary and secondary schools and further education establishments;
    • Employer, professional, religious or political membership organisations.
What you will need to make an application:

You will need details of the facility you require, including:

  • The amount you would like to borrow.
  • What the money is for – the lender will check that it is 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:

  • Management accounts
  • Cash flow forecasts
  • A business plan
  • Historic accounts
  • Details of assets

We have spoken to most major lenders who have all indicated that the business plan and
forecast information will be key to the lending decision. It is incumbent on borrowers that
they can properly demonstrate the funding requirement and what steps have been taken
to quantify the impact of coronavirus on the business and minimise this.

For more information

For more information or if you have any queries, please contact us on:

01483 416232