Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) is a response by the government to the ongoing Coronavirus. The new measure is designed to assist businesses who may face financial difficulty over the coming months.

The scheme aims to provide easier access to loans of up to £5m (increased from an initial £1.2m) for smaller businesses in the UK.

What are the key features of the Coronavirus Business Interruption Loan scheme?

Under the scheme, businesses will be able to access loans of up to £5m which will be made available on repayment terms of up to six years.

One of the key elements is that the loan will be backed by the government with an 80% guarantee against the balance owed. This offers security to the lenders, which should make it easier for businesses to secure funding, and allow businesses who may otherwise be denied finance a chance to access a loan. It’s important to note, that the borrower will still remain 100% liable for the debt.

There will be no fee payable by any business to access this loan scheme, instead the lenders themselves will pay a fee to access the scheme. This means there will be no upfront cost to any business seeking a loan under the scheme.

In addition to this, all interest and fees incurred in the first 12 months will be covered by the Government. This will benefit businesses, especially smaller businesses, as the initial loan repayments will be lower than they would be on a standard loan.

The British Business Bank has expressed that should a lender be able to offer finance on normal terms, without the need to use the CBILS, they will do so.

Who is eligible?

According to the British Business Bank, a business must meet both of the criteria outlined below to be eligible.

  • You must be a UK based business, with a maximum annual turnover of £45m

AND

  • Have a borrowing proposal that would be considered viable by the lender, were it not for the current pandemic.


How to apply for a Coronavirus Business Interruption Loan

The scheme went live on 23rd March, meaning that you are now able to obtain finance under the CIBLS.

The loans will continue to be issued by lenders in the usual way – i.e. via your bank and other accredited finance providers.

Banks are releasing details on their process for applying for a loan under the scheme, so the first step would be to check for any information that has been released by your bank on their website. You’ll likely find that your bank has a dedicated Coronavirus page where you can find all of the necessary information on how to apply.

If you’re unable to locate any relevant information/instruction online, you should call your bank to speak with them directly. It’s worth noting that phone lines will be busier than usual, so it’s important that you first check online to ensure you can take the required action as soon as possible.

The next steps will depend on each individual lender, and their requirements for granting a loan application. Make sure to fully read all of the available material issued by your bank, as this will detail everything that is needed from you.

Key Points

  • Applications for a loan under this scheme must be made via your bank or finance provider.
  • Banks, Building Societies, Insurers and Reinsurers & public sector entities (state funded primary and secondary schools, professional/religious/political membership organisations or trade unions) are NOT eligible to apply

Please get in touch if you would like any further advice on the Coronavirus Business Interruption Loan Scheme and government support.