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Coronavirus Business Interruption Loan Scheme

Coronavirus Business Interruption Loan Scheme

Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for  SMEs through the British Business Bank

What is it?

  • The new CBILS supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value.
  • 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 government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.
  • The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.
  • Security is at the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so
  • This scheme is being delivered through commercial lenders, backed by the British Business Bank.

Who is it for?

You are eligible for the scheme if:

  • Your business is UK based, with turnover of no more than £45 million per year.
  • Your business must generate more than 50% of its turnover from trading activity.
  • Your business meets the other British Business Bank eligibility criteria

How does it work?

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. 

Coronavirus businesses interruption loan can be sought before other commercial sources of finance. 

The scheme is now open for applications. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites.

Decision-making on eligibility for CBILS is fully delegated to the 40+ accredited CBILS lenders.

All major banks are offering this scheme. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow. 

CBILS will match the commercial rate of interest to reflect the current low Bank of England interest rates, and the Government is responsible for the loan’s first year of interest and fees.

Lenders are banned from demanding personal guarantees for loans under £250,000.

A new coronavirus large business interruption loan scheme (CLBILS) would offer up to £5m for large firms (£45m-£500m) not currently eligible for support loans.

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

Bounce Back loans
You cannot apply for a Bounce Back Loan if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

What should I do next?

Critchleys Clients: If you have specific questions, please contact your Critchleys Accountant directly.

 


Published 24 March 2020
Last Updated 30 April 2020

30 April 2020

Bounce Back loans
You cannot apply for a Bounce Back Loan if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).

If you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4 November 2020.

27 April 2020

Bounce Back loans
The Chancellor also announced that small businesses will be eligible for new loans worth between £2,000 and £50,000, which are backed by a 100% government guarantee.

The government will pay the interest on these 'bounce-back loans' for the first 12 months.

The scheme will open at 09:00 on Monday 4th May, with loans expected to arrive within 24 hours of approval.

6 April 2020

  1. Coronavirus businesses interruption loan can be sought before other commercial sources of finance. 
  2. CBILS will match the commercial rate of interest to reflect the current low Bank of England interest rates, and the Government is responsible for the loan’s first year of interest and fees.
  3. Lenders are banned from demanding personal guarantees for loans under £250,000.
  4. A new coronavirus large business interruption loan scheme (CLBILS) would offer up to £5m for large firms (£45m-£500m) not currently eligible for support loans.

24 March 2020
First published.

Find out more about Mark Rusher

Mark Rusher

Mark Rusher

Mark is our Managing Partner.

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