Coronavirus Business Interruption Loan Scheme

(CBILS)

This scheme backs the banks / finance houses with an 80% guarantee but the lenders’ normal rules apply. The loan money is not coming from the bank and therefore the bank or lender still has to take a risk for at least 20% when lending you the money. They will still want to feel confident that the business was a good healthy business before this situation.

For loans up to £50K, there is also the Coronavirus Bounce Back Loan (see our page on this here)

The business must be:-

  • UK-based in its business activity
  • Have an annual turnover of no more than £45 million (other scheme CLBILS for larger company)
  • Your business must generate more than 50% of its turnover from trading activity (selling goods or services)
  • Your CBILS-backed facility will be used to support primarily trading in the UK
  • Have a borrowing proposal which the lender:
    • would consider viable, were it not for the COVID-19 pandemic
    • Self certify that you are adversely affected by COVID-19
  • Not have been classed as a ‘business in difficulty’ on 31 December 2019, if applying to borrow £30,000 or more

Loan facilities from £50,001 to £5M

Overdrafts, Invoice Discounting and Asset Finance from £1K to £5M

Interest rates vary from lender to lender

Under £250K – Unsecured no Personal Guarantee

Over £250K – Personal Guarantee for 20% of loan (not all lenders are asking for this) and even where there is a 20% guarantee this cannot be against Principal Private Residence (PPR)

Term – up to 6 years for loans & asset finance (dependent on lender)

Term – up to 3 years for overdrafts & invoice discounting (dependent on lender)

Government to pay first 12 months lender fees and interest

Some lenders offering no Early Repayment (ERP) fees

Some lenders offering capital repayment holidays for 6 months plus

Be wary as each lender is using criteria according to the measures below. Check with your bank/lender what the criteria is before applying:-

  • 25% of turnover or
  • Twice the annual wage bill or
  • Liquidity assessment for the next 18 months
  • Or any/all of the above based on the lender’s requirement

You can apply to more than one lender even if you are rejected and there are other lenders who are offering CBILS, such as SWIG and Funding Circle. See full list at the link here.

The scheme is initially being offered for 6 months but may be extended

Apply to your own bank first as most banks are not accepting applications from new customers.

Fishery, aquaculture and agriculture may not be eligible for the full fee and interest free payment

Not able 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.

Re-finance is possible for up to 20% of the loan value

Most importantly please remember that despite the government 80% guarantee to the lender, you (the business) are still responsible for 100% of the loan.

Update from British Business Bank

Access to the scheme has now been opened up to smaller businesses facing cash flow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. You may therefore consider re-contacting your lender if you have previously been unsuccessful in securing funding. If the amount is below £50K please go to the Bounce Back Loan information.

Advice for getting an application ready

  • Last set of financial accounts
  • Management accounts to the pre CV-19 position
  • A clear explanation of the impact of coronavirus on your business
  • How will you mitigate the impact of CV-19 on your business

We have a generous grant scheme that can give you 50% of the cost of your Accountant doing cashflow/financial forecasts or/and Management Accounts as required in order to apply for the loan. This grant is a minimum of £1,000, therefore the quote value must be £2,000 plus from your Accountant. The maximum grant is £7,500.

This grant is subject to eligibility for our programme.

Please note: You must apply for this and receive approval for the grant before you commit to having the work done or spending the money. At the moment we are predicting that the grant panel can approve within 7 working days if they receive a full application with all the documentation required.

Our team are also able to help you with forecasting and we have templates/tools to help with this.

For full details of the scheme please visit the British Business Bank page here.

How can we help? Email us