CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME EXPANDED TO BENEFIT MORE SMALLER BUSINESSES ACROSS THE UK
3 April 2020
- Personal guarantees cannot be taken for any facilities below £250k
- Insufficient security no longer a condition to access the scheme
- Personal guarantees may be required for facilities above £250k but capped at 20% of the outstanding balance after business asset recoveries
- Lenders to retrospectively apply changes
Launched on 23 March, today the Coronavirus Business Interruption Loan Scheme (CBILS) has been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes announced on April 2nd 2020 mean even more smaller businesses across the UK impacted by the Coronavirus crisis can access funding.
Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme.
About the scheme
The Coronavirus Business Interruption Loan Scheme, delivered through 40+ British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
It supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.
Updated scheme features
- No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
- Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
- Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment.
Existing scheme features
- Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years.
- No guarantee fee for SMEs to access the scheme: No fee for smaller businesses.
- 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.
- 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80% gross) against the outstanding facility balance, subject to an overall cap per lender.
- Principal Private Residence (PPR) – A borrower’s/guarantor’s PPR cannot be taken as security to support a Personal Guarantee or as security for a CBIL backed facility.
- The borrower always remains 100% liable for the debt.
Updated eligibility criteria April 2nd 2020
SMALLER BUSINESSES FROM ALL SECTORS CAN APPLY FOR THE FULL AMOUNT OF THE FACILITY.
TO BE ELIGIBLE FOR A FACILITY UNDER CBILS, A SMALLER BUSINESS 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.
- Self-certify that it has been adversely impacted by the Coronavirus (COVID-19).
How to apply
CBILS is available through the British Business Bank’s 40+ accredited lenders.
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. Not every accredited lender can provide every type of finance available under CBILS.