Coronavirus Business Interruption Loan Scheme (CBILS) For SMEs

Due to the coronavirus pandemic, there are no doubt many businesses including small and medium sized businesses in the UK that have been adversely affected from a financial perspective. As a result, in order to assist qualifying businesses, the government has introduced the Coronavirus Business Interruption Loan Scheme (CBILS). More information can be found on the british-business-bank website but we thought we would highlight some of the details of the scheme below.

What sorts of businesses may qualify for the scheme?

A business based in the UK that is in difficulty with a turnover of no more than £45 million that has a viable borrowing proposition may qualify whether it is a sole trader, partnership or limited company. The business is permitted to self-certify that the coronavirus pandemic has had an adverse impact on it.

Who is providing finance?

There are in excess of 40 accredited lenders here in the UK including Barclays, Bank of Scotland, Lloyds Bank, HSBC, NatWest, Royal Bank of Scotland, TSB, The co-operative bank, Ulster Bank and Santander to name but a few.

The lender makes the decision as to whether to provide the finance. If a lender declines the application the business can still approach a different lender.

How much can you borrow?

You can apply to borrow up to £5 million on loan, overdraft, asset finance or invoice finance for a period of up to 6 years depending upon the facility required.

What information will a lender require?

The lender may require the likes of a cash flow forecast, audited accounts, management accounts, business plan and details of any assets. It will also need to know how much you would like to borrow, over what period you would like to borrow the funds for and the purpose of the borrowing.

Security

If the borrowing is below £250,000 the lender will not require a personal guarantee.

The lender may request one or more guarantees for borrowing above that figure although this will not need to be supported by a charge over the principal private residence of the guarantor(s) and the amount recovered under the guarantee(s) will be limited to no more than 20% of the outstanding debt after applying any proceeds of the assets of the business.

A charge may be required over business assets.

The government will provide a guarantee of 80% of the amount advanced to lenders.

Fees and Interest

You will be pleased to read that the government has agreed to cover any borrowing set up fees normally charged by the lender and will also pay the first year’s interest payments.

So, if your business fulfills the criteria for a Coronavirus Business Interruption Loan, why not get in touch with one of the accredited lenders as soon as possible.

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