The Coronavirus Business Interruption Loan Scheme now live

March 23rd 2020

The Chancellor announced that the British Business Bank will manage the Coronavirus Business Interruption Loan Scheme (CBILS) which is available from today, 23rd March 2020 and will initially run for 6 months.

More details can be found on the British Business Bank website

However here is a short summary of the key features:

•   Through this scheme businesses who are experiencing increased costs or lost or deferred revenues during the Covid-19 outbreak can apply for a new loan, overdraft, Invoice finance facility or asset finance of up to a maximum of £5m from their bank or through 40+ other accredited lenders.
•     Finance terms are up to 6 years for term loans and asset finance facilities, overdrafts and invoice finance facilities will be up to 3 years.
•   The scheme provides the lender with a government-backed partial (80%) guarantee against the outstanding facility balance (lenders post recoveries claim), potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
•   No guarantee fee for SMEs to access the scheme, Lenders will pay a fee to access the scheme.
•   Note that the borrower always remains 100% liable for the debt, the lender should not be taking a personal guarantee for the 20% not covered under CBILS.
•   Unsecured lending, at lender discretion this scheme can be used for unsecured lending of £250k and under. Above this value the lender will need to establish a lack or absence of security prior to using CBILS.
•   The Government will cover the first 12 months of interest payments and any facility arrangement fees charged by lenders, so businesses will benefit from no upfront costs and lower initial repayments.

To be eligible a business must be:

UK based and have a borrowing proposal, were it not for COVID-19 pandemic, would be considered viable by the lender, and for which the lender believed the provision of finance will enable the business to trade out of any short-to-medium difficulty.

It is worth noting that decision making on whether you are eligible is delegated to the lender and if the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

For further information please visit British Business Bank CBILS