The Chancellor announced at Spring Budget 2020 that a new Coronavirus Business Interruption Loan Scheme (CBILS) would be launched to help support smaller businesses, with turnover of up to £45m, across the UK.
Since that announcement, the Chancellor has added features and benefits to the scheme including increased loan support and interest free periods. It has also been confirmed by government that although an initial £1.2bn of government-backed lending would be available, the amount of lending will now be demand-led.
The CBILS opened for applications on 23 March 2020. The scheme is aimed at businesses who are experiencing lost or deferred revenues, leading to disruptions to their cashflow as a result of COVID-19.
The scheme will be delivered by the British Business Bank through 40+ accredited lenders and partners. The CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.
The main features of the scheme are as follows:
- 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, subject to an overall cap per lender.
- 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.
Businesses must meet certain eligibility criteria in order to apply and have a sound borrowing proposition. It is also important to note that if the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. Please have patience when contacting lenders about the scheme as bank branches may be closed or have limited capacity and phone lines and websites may also be overloaded.