Coronavirus Business Interruption Loan Scheme

 

The scheme is now open for applications. All major banks are offering this scheme.

The scheme is delivered through commercial lenders, backed by the Government-owned British Business Bank.

The CBILS guarantee is to the lender and not the business. Under this scheme, the Government provides the Lender a guarantee for 80% of the loan. As with any other commercial transaction, the borrower is always 100% liable for the repayment of the facility supported by CBILS.

 

Key Features:

 

  • The temporary Coronavirus Business Interruption Loan Scheme supports small and medium-sized businesses with access to loans, overdrafts, invoice finance and asset finance.
  • The Government will also 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.
  • Minimum amount £25,001 – maximum £5 million for up to 6 years.
  • After the first 12 months, interest at an agreed margin over the Bank of England Bank Rate will be payable
  • A capital repayment holiday can be requested at the start of the loan or mid-term
  • CBILS supports a wide range of business finance facilities, including:
    • Term loans
    • Overdrafts
    • Asset finance
    • Invoice finance

 

Am I eligible?

The scheme is designed to support smaller businesses (SMEs) who don’t meet a lender’s normal lending requirements for a fully commercial loan or other facility, but who are considered viable in the longer-term.

To be eligible for a facility under CBILS, your business must:

  • Be UK based in its business activity with annual turnover of no more than £45 million
  • Have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty.
  • Smaller businesses from any sector can apply for the full amount of the facility.

 

UNPUBLISHED bank guidelines

The maximum amount of the loan is the lower of:

  • 25% of the previous year’s turnover OR
  • 2 times the total annual payroll cost

The criterion is to cover 6 months absolutely necessary business expenses, such as salaries, rent and overheads to keep the business operational.

Some banks turnaround applications in 3 days for straightforward approvals.

 

How do I access it?

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.

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website.

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