Announced by the Chancellor at Budget 2020, the Coronavirus Business Interruption Loan Scheme (CBILS) opens for applications today and can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
Delivered by the British Business Bank, through 40+ accredited lenders and partners, the Coronavirus Business Interruption Loan Scheme will support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak.
Although the Budget announced that an initial £1.2bn of government-backed lending would be available through the new scheme, the government has since announced that it will be demand-led and will be resourced accordingly.
The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.
The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
- 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.
For further information on CBILS please see this FAQ provided by the British Business Bank.
CBILS Eligibility criteria
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 turnover of no more than £45m per year
- 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. 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, interested parties can read the CBILS Eligibility Check factsheet.
How to apply for CBILS
CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.
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.
Chancellor of the Exchequer, Rishi Sunak said: “We are working round the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”
Keith Morgan, Chief Executive, British Business Bank, said: “In this period of exceptional hardship for smaller businesses across the UK, it has been vitally important to get this new scheme up and running as soon as possible. Available from today, we hope this new scheme will enable lenders to provide the finance smaller UK businesses need, alongside other government measures, to help them survive the current economic disruption.”
Business Secretary, Alok Sharma said: “We know that businesses are in urgent need of access to funding during these unprecedented times. The Coronavirus Business Interruption Loan Scheme will make it easier for banks to lend and businesses to borrow. This will ensure that credit keeps flowing to where it is needed, when it is needed.”
For further information, please see the Coronavirus Business Interruption Loan Scheme Factsheet.
For further information on Coronavirus please see our COVID-19 webpages.