Announced by the Chancellor at Budget 2020, the Coronavirus Business Interruption Loan Scheme (CBILS) is now open for applications. Some details were updated on the 3rd April. The loan scheme 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. It is delivered by the British Business Bank, through 40+ accredited lenders and partners.

CBILS 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’.

Here are some FAQ’s to help you:

Eligibility

All small businesses can apply. To be eligible for a facility under CBILS, your business must:

  • is based in the UK
  • has an annual turnover of up to £45 million
  • has a borrowing proposal which the lender would consider viable, if not for the coronavirus pandemic. (If you’re running at a loss, you might still be eligible however you still need to have a borrowing proposal)

The key changes to the CBILS are:

  • All SME’s are eligible, not just those that could not secure finance through normal means, previously a major barrier to lots of businesses wanting to access the scheme
  • Personal guarantees cannot be sought for loans under £250,000
  • For loans over £250,000, personal guarantees can be sought for 20% of the outstanding amount of the loan i.e. the amount not guaranteed by the Government – this will be backdated to loans already offered under the scheme

How do I access the scheme?

In order to apply you need to speak to your bank. Currently lenders are still only taking on their own account holders. They are saying that they need to clear the backlog and ensure their clients are up and running before looking to lend outside of their customer base.

What are the fees to borrow under CBILS?

There is no guarantee fee for SMEs to use the CBILS scheme. Lenders will pay a fee to access the scheme.

What types of finance are available and who offers which type?

CBILS supports a wide range of business finance facilities, including:

  • Term loans
  • Overdrafts
  • Asset finance
  • Invoice finance

Note: Not every lender can provide every type of finance listed.

What types of businesses is CBILS for?

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.

Is the scheme appropriate for Start-ups?

Potentially, if your business activity is primarily UK-based. For early stage businesses in their first two years of trading, the British Business Bank’s Start Up Loans programme (loans £500 to £25,000 at 6% p.a. interest) may be more suitable. Visit www.startuploans.co.uk for more information.

What do lenders need from me?

  • The amount you would like to borrow
  • What the money is for
  • The period over which you will make the repayments

You may be asked for supporting evidence to show you can afford to repay the loan, this is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business Plam
  • Historic accounts
  • Details of assets

Will the CBILS funds run out so I can’t access the scheme?

No. Government has confirmed that the amount of funding available under the scheme will be demand-led. Therefore there is no immediate need to approach a lender if you do not need finance in the short-term. The scheme will initially run for six months.

Are sole traders / freelancers eligible?

Yes, as long as the business activity is operated through a business account. The scheme is open to sole traders, freelancers, limited partnerships, limited liability partnerships or other legal entity carry out a business activity in the United Kingdom, with annual turnover of up to £45m, operating in all sectors. The business must generate more than 50% of its turnover from trading activity.

I am getting other kinds of aid to help respond to COVID-19 – can I still get a loan?

Yes. The eligibility criteria for CBILS does not require Lenders to take into account the other forms of government support that SMEs may be benefiting from e.g. business rate reliefs or grants unrelated to the CBIL scheme.

If you have further questions your first point of call should be your provider but if we can help in any way please do let us know.