The information on this page was last updated on 17th December 2020.
Applications for the Coronavirus Business Interruption Loan Scheme have been extended until the 31st March 2021.
The Coronavirus Business Interruption Loan Scheme (CBILS), which opened for applications on 23 March, can provide loan facilities of up to £5m for smaller businesses across the UK (SMEs) that are experiencing lost or deferred revenues, leading to disruptions to their cashflow. It is delivered by the British Business Bank through 50+ accredited lenders and partners.
Although the government initially committed £1.2bn of Government-backed lending through the new scheme, it subsequently announced that it will be demand-led and resourced accordingly.
The British Business Bank has amended the CBILS guidance. From 30th July 2020 smaller businesses with fewer than 50 employees and less than £9m in annual turnover will not be considered ‘undertakings in difficulty’, and may now be eligible for the scheme. Further details are available here.
Scheme features
The Coronavirus Business Interruption Loan 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’.
- Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
- 80% guarantee: The scheme provides the lender with a government-backed guarantee against 80% of the outstanding facility balance.
- Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees¹, so smaller businesses will benefit from no upfront costs and lower initial repayments.²
- 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.
- The borrower always remains 100% liable for the debt.
Eligibility criteria
Smaller businesses from all sectors³ can apply. To be eligible for a facility under CBILS, an SME must:
- Be UK based in its business activity, with turnover of no more than £45m per year
- Have a borrowing proposal which, were it not for the current pandemic, would have been considered viable by the lender – although there is no forward-looking viability test required by the government, the lender may require this evidence.
How to apply
CBILS is available through the British Business Bank’s 50+ accredited lenders and partners listed on the British Business Bank website.
In the first instance, businesses should approach their own lender but may also consider approaching other lenders if they are unable to access the finance required.
Given the high demand for facilities, businesses should:
- Apply via the lender’s website, or their relationship manager, in the first instance.
- Consider the urgency of their need – it is possible that some businesses may be looking for regular longer-term finance rather than ‘emergency’ finance, there may be other businesses with a more urgent need to speak with a lender.
Here at Smith Cooper Corporate Finance, our team of specialist advisors are on hand to help you make sense of the types of funding options available to companies and how best to access them. If you require assistance, please don’t hesitate to get in touch.
View full details of the scheme here
¹ Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM Government greatly appreciates this approach by lenders
² Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.
³ The following trades and organisations are not eligible to apply: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state funded primary and secondary schools; Employer, professional, religious or political membership organisation or trade unions.
