What is the Coronavirus Business Interruption Loan Scheme (CBILS)?
CBILS is a scheme for businesses across the UK that are experiencing lost revenue due to the coronavirus, causing cash flow issues within their business. It is a temporary measure, administered by the British Business Bank, and will be available to businesses via accredited lenders.
What are the key features of the scheme?
● Maximum amount available is £5m.
● Loans and assets finance will have repayment terms of up to six years while overdrafts and invoice finance will be up to three years.
● The loan will be interest free for 12 months, and the government will cover any fees.
● Unsecured lending may be available up to £250,000. Any loans above this amount must be secured.
● SMEs don’t need to pay a guarantee fee
● There is an 80% government backed guarantee, however the borrower always remains 100% liable for the repayment of the debt
● Some lenders are offering Capital Repayment Holidays for 12 months – so you may not have to make any payments in the first year.
What is the eligibility criteria?
You must submit a borrowing proposal to the lender which, ‘were it not for the current pandemic, would be considered viable by the lender’. It’s important to remember, this is not the only government support announced and the other measures may be more suitable for your individual position.
You must be able to answer yes to all of the following questions to be eligible for the loan:
● Your application must be for business purposes
● You must be a UK-based SME with annual turnover of up to £45m
● Your business must generate more than 50% of its turnover from trading activity
● Your CBILS-backed loan will be used to support primarily trading in the UK
● You wish to borrow up to a maximum of £5m.
For the purposes of clarity, an SME is defined as ‘a company with a turnover of no more than £45m and meet certain other criteria, such as having fewer than 250 employees’
How do you access the scheme?
The British Business Bank has a list of accredited lenders which can be accessed here. You are advised to apply on the lender’s website and follow the steps.
Should you need support with the loan application process or want to talk through your funding needs, HB&O have dedicated specialists that will be able to help.
What type of businesses are eligible?
The scheme is open to sole traders, freelancers, limited partnerships, limited liability partnerships or any other legal entity trading in the UK, who can answer yes to the five questions in the eligibility section above.
I am getting other kinds of COVID-19 financial assistance from the government – can I still get a loan?
Yes, lenders will not take into account any other coronavirus government support that you have received, for example business rates relief or grants.
What are the next steps?
If you feel that the CBILS is suitable for your individual business situation, contact HB&O’s specialist finance consultant, Mark Edwards on mark.edwards@hboltd.co.uk or Holly Andrews on holly.andrews@hboltd.co.uk as soon as possible, so we can guide you through the process of applying for the loan.
