Information correct as at 27 April 2020
The UK Government has implemented the Coronavirus Business Interruption Loan Scheme (CBILS) to support long-term viable businesses who may need to respond to short term cash-flow pressures by seeking additional finance.
We explain in this article what CBILS is, who it is for and (given the high levels of demand for funds under the scheme) some practical tips for businesses who are considering applying for a loan under the scheme.
What is CBILS?
CBILS supports small and medium-sized businesses, with an annual turnover of up to £45 million, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to 6 years.
The government will also make a ‘Business Interruption Payment’ to cover the first 12 months of interest payments and any lender-levied fees. This means smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to small and medium-sized businesses.
The scheme is delivered through commercial lenders, backed by the government-owned British Business Bank. With lender accreditations growing since the implementation of the scheme, there are now 48 accredited lenders able to offer the scheme, including all the major banks. Logically, an applicant for a CBILS loan should first consider applying to its own incumbent bank.
Who is it for?
Eligibility requirements are as follows:
The following businesses are not eligible to apply:
Practical Tips for successfully obtaining a CBILS loan
Demand for CBILS funding has been high and lenders have been deluged with large numbers of applications. Therefore, we set out below some practical advice on what information might be required and what questions applicants should be prepared to answer, in order to help an application to proceed as smoothly as possible. If you are intending to apply for a CBILS loan, you should have all the information required ready and prepared before commencing the application process.
Each lender will have their own forms and requirements, but most will require all or some of the information listed below:
Lenders will also want to understand the following in respect of each applicant:
Other forms of government (backed) loan funding for businesses
If an applicant does not meet the criteria for a CBILS loan, it should consider the following other schemes:
If you would like to discuss any aspect of the CBILS or the requirements of any application for a loan under this scheme or the relevant loan documentation, please contact Simon Morris or Jon Healey in the corporate team at Raworths.