Funding - Business Interruption Loan Scheme (CBILS)

Funding - Business Interruption Loan Scheme (CBILS)

CBILS is a new scheme that 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. 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’.

When can I access the scheme?

The scheme went live on Monday 23 March and will initially run for six months.

What are the key features of CBILS?

  • CBILS guarantees facilities up to a maximum of £5m available on repayment terms up to six years for term loans and asset finance. For overdrafts and invoice finance facilities, terms will be up to three years.
  • The scheme provides the lender with a government backed partial (80%) guarantee against the outstanding facility balance.
  • There is no guarantee fee for SMEs to access the scheme. Lenders will pay a fee to 
    access the scheme.
  • The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender levied fees. You (the SME) will therefore benefit from no upfront costs and lower initial repayments.
  • 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 scheme requires the lender to establish a lack or absence of security prior to businesses using CBILS. 
  • Primary Residential Property cannot be taken as security under the scheme. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

Please note: It’s important that you are aware that you, the borrower will always remain 100% liable for the debt. The CBILS guarantee is to the lender, not you, the SME.

How do I know if I’m eligible to apply?

Smaller businesses (SMEs) from all sectors can apply for the full amount of the facility, up to a maximum of £5m. To be eligible for a facility under CBILS, your business 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 COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your 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.

How can I access the scheme?

CBILS is available through the British Business Bank’s 40+ accredited lenders, which are listed on the British Business Bank website here. 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.

Considerations:

  • applying via the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to social distancing
  • Consider the urgency of your need it is possible that some businesses may be looking for regular longer-term finance rather than ‘emergency’ finance, and there may other businesses with a more urgent need to speak with a lender.

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities. These businesses can contact HMRC’s new dedicated COVID-19 helpline from 11 March 2020 for advice and support. To ensure ongoing support, HMRC has made a further 2,000 experienced call handlers available to support firms and individuals when needed. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

Please contact us if you have any queries on funding.

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