Coronavirus Business Interruption Loan Scheme (CBILS) Is Now Available Through Participating Lenders

Coronavirus Business Interruption Loan Scheme (CBILS) Is Now Available Through Participating Lenders

The scheme will help smaller businesses withstand disruptions caused by the coronavirus outbreak.

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the coronavirus outbreak. The Coronavirus Business Interruption Loan Scheme will temporarily replace the Enterprise Finance Guarantee Scheme.

HOW IT WORKS

British Business Bank operates CBILS via its accredited lenders. There are over 40 of these lenders currently working to provide finance. They include:

  • high-street banks
  • challenger banks
  • asset-based lenders
  • smaller specialist local lenders

A lender can provide up to £5 million in the form of:

  • term loans
  • overdrafts
  • invoice finance
  • asset finance

CBILS gives the lender a government-backed guarantee for the loan repayments to encourage more lending.

The borrower remains fully liable for the debt.

The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000.

KEY FEATURES OF THE SCHEME

Finance of up to £5 million

The maximum value of a facility provided under the scheme is £5 million, available on repayment terms of up to six years.

Guarantee to the lender to encourage them to lend

The scheme provides the lender with a government-backed, partial guarantee against the outstanding balance of the finance.

The borrower remains 100% liable for the debt.

Government pays interest and fees for 12 months

The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges.

Finance terms

For term loans and asset finance facilities: up to six years.

For overdrafts and invoice finance facilities: up to three years.

Security

If a lender can offer finance on normal commercial terms without making use of the scheme, it will do so.

The lender can choose to use the scheme for unsecured lending for facilities of £250,000 and under.

The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000.

For facilities above £250,000, it must establish that the borrower is unable to provide security, before it uses CBILS.

Primary residential property cannot be taken as security under the scheme.

No guarantee fees for businesses

There are no guarantee fees for SMEs. Lenders pay a fee to access the scheme.

HOW TO APPLY

  1. Find a lender

View and select a CBILS accredited lender

  1. Approach a lender

You should approach a lender yourself, ideally via the lender’s website.

Note: There is high demand for CBILS facilities. Phone lines are likely to be busy and branches may not be able to handle enquiries in person.

  1. The lender makes a decision

The lender has the authority to decide whether to offer you finance. If it can do so on normal commercial terms without having to make use of the scheme, it will.

The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000.

  1. If the lender turns you down

If one lender turns you down, you can still approach other lenders within the scheme.

WHO IS ELIGIBLE

Your business must:

  • Be UK-based in its 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 COVID-19 pandemic
    • believes will enable you to trade out of any short-term to medium-term difficulty

View Quick Eligibility Checklist

Businesses from any sector can apply, except the following:

  • Banks and building societies
  • Insurers and reinsurers (but not insurance brokers)
  • Public-sector organisations, including state-funded primary and secondary schools
  • Employer, professional, religious or political membership organisations
  • Trade unions

View CBILS frequently asked questions for businesses

OTHER BUSINESS FINANCE SUPPORT OPTIONS

You can find details of other government measures to support public services, people and businesses through this disruption on the Government’s Business Support website.

GUIDANCE AND SUPPORT FOR YOUR BUSINESS DURING THIS PERIOD OF UNCERTAINTY

The British Business Bank and The Institute of Chartered Accountants in England and Wales (ICAEW) have created new content to help businesses that are facing financial and operational challenges as a result of the coronavirus outbreak.

You can view this regularly updated guidance at the Business Finance Guide website.

The Coronavirus Business Interruption Loan Scheme is being delivered by the British Business Bank. You can follow updates on the British Business Bank’s website.

Share this article:

Related Articles

Sebastien Fontenoy holds an MBA degree and writes about entrepreneurship, startups and finance.