The Coronavirus Business Interruption Loan Scheme (CBILS) announced during the budget and enhanced last week is now available. According to the British Business Bank, the provider through participating lenders, CBILS will offer more attractive terms to provide finance to UK businesses during the Covid-19 outbreak. In extracts from the British Business Bank website they advise the following:
CBILS Key features
- 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, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
- No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
- 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 fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
- 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.
- Security: 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.
- The borrower always remains 100% liable for the debt.
Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME must:
- Be UK-based in its business activity, with annual turnover of no more than £45m
- Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
Please note: If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
- 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.
- Decision-making on whether you are eligible for CBILS is fully delegated to the 40+ accredited CBILS lenders. These lenders range from high-street banks, to challenger banks, asset-based lenders and smaller specialist local lenders.
- Note: if the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.”
The British Business Bank has now released details of the scheme and they have produced a Frequently Asked Questions for SMEs document. More information on support for businesses during the outbreak can be found here.
Need help to prepare your borrowing proposal for your lender?
If you are experiencing short to medium term cashflow issues caused by Covid-19, and are considering applying for CBILS, we have prepared a checklist of the information most lenders are likely to require in your borrowing proposal. If you need our help in putting this together, please do get in touch.