The Coronavirus Business Interruption Loans Scheme

It is available to businesses with up to £45m turnover, with loans up to £5m which will be fee free and have 12 months interest free.

Scheme features

The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

• 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[1], so smaller businesses will benefit from no upfront costs and lower initial repayments.[2]
• 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
• The borrower always remains 100% liable for the debt.

Eligibility criteria

Smaller businesses from all sectors[3] can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME 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, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

How to apply

CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.

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.

• If you had a viable business, that has to cover a short-term impact, and your business will be viable again, the CBILS is for your business.  It comes with no fees and is interest free for the first 12 months
• That the telephone lines at banks and finance providers will be beyond capacity (many are deploying additional resource) but firms should note that government has not put a cap on this funding and the CBILS capacity is unlimited and will be sustained – there is no need for firms to rush to apply
• All previous government funding schemes had a 2% guarantee fee attached to it that the firm had to pay – this has been removed
• No business will be asked to put up their principal residence as security – the FCA conduct rules for this scheme prohibits this.

Please note that your business needs finance to increase capacity to provide vital goods and services during the crisis, then that is not covered by CBILS – your business will go through normal lending channels

[1] Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM government has noted it appreciates this approach by lenders.

[2] Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.

[3] The following trades and organisations are not eligible to apply: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state funded primary and secondary schools; Employer, professional, religious or political membership organisation or trade unions.