Coronavirus Business Interruption Loan Scheme

Today sees the launch of the government’s loan scheme to help businesses through the coronavirus / COVID-19 outbreak.

The Coronavirus Business Interruption Loan Scheme (CBILS) was announced by the Chancellor at the recent Budget. This was part of the measures introduced in response to the unfolding coronavirus outbreak. CBILS will initially run for six months.

The scheme provides a range of finance options to suit the needs of those businesses that are experiencing lost or deferred revenues. As well as term loans, CBILS also provides support for overdrafts, asset finance and invoice finance.

What CBILS provides

  • 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.
  • 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.

Who is eligible?

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;
  • Have an 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.

Due to the likely demand businesses are advised to apply through their regular provider first. Read information on how to apply here.

Read the full announcement from the British Business Bank here.

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