Coronavirus Business Interruption Loan Scheme: overview and practical issues

Updated: Jan 27

9 April 2020


The Coronavirus Business Interruption Loan scheme (CBILS) is a newly announced UK Government scheme, being one of the measures intended to help small business in the wake of the COVID-19 outbreak.


Coronavirus Business Interruption Loan scheme (CBILS) is a new temporary measure only. After the end of the epidemic or stabilization of the situation, this approach will be terminated. The funding for the scheme will be provided by the British Business Bank, which is a development bank wholly owned by the UK government.


The recent UK budget announced attractive terms for both businesses and lenders, with the aim of supporting the continued provision of finance to UK businesses during these challenging times. This new guarantee will provide total support of up to £1 billion.


CBILS: what, where and who?


The funding for the scheme will be provided by the British Business Bank, which is a development bank wholly owned by the UK government.


What is the essence of the scheme?

The main idea is to support businesses to access bank lending and overdrafts. The UK government will provide accredited lenders (see list below) with a guarantee of 80% on each loan they make to give these lenders confidence in continuing to provide finance to small business. Such guarantees are vital in changing the credit decision given by a lender.


What are the loan limits? The loan limits under CBILS are a minimum of £1,000 and a maximum of £5,000,000.


What is the interest rate?

Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.


Who can apply?

Only small business (SMEs) can apply. Preliminary eligibility conditions are:

  1. UK registered business;

  2. Turnover less than £41,000,000 per annum;

  3. Ability to confirm that the business has not received de minimis State aid beyond €200,000 equivalent over the current and previous 2 fiscal years;

  4. The business operates within an eligible industrial sector (building societies, banks, insurance, reinsurance, activities of trade unions, households as employers of domestic personnel etc. are excluded);

  5. The business has a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements.

Note that the borrower (the SME) will always remain 100 % liable for the debt.


Concessionary terms?

The Government will waive the 2 % it charges borrowers annually for the EFG guarantee. Thus, the Government will not charge businesses or banks for a CBILS guarantee.


CBILS business finance products available

The preliminary range of business finance products are:

a) Term facilities;

b) Revolving Credit (Overdrafts);

c) Asset finance facilities;

d) Invoice finance facilities.


What are the financial terms?

Finance terms are:


a) from 3 months up to 10 years for term loans and asset finance;

b) up to 3 years for revolving facilities and invoice finance.


Application Process


The application process is simple and should take no longer than a standard EFG. To use CBILS, small businesses should consider approaching one or more participating lenders to discuss their borrowing needs.

  • How to apply for the CBILS?

  1. If a business wishes to apply for a CBILS, they should apply to one or more of the accredited lenders with their borrowing proposal.

  2. If the accredited lender can offer finance on normal commercial terms (i.e. without CBILS), they will offer it.

  3. If the small business has a sound borrowing proposal but insufficient security, the accredited lender considers the business for support via CBILS.

  • Who is responsible for decision?

CBILS decision making is fully carried out by the accredited lenders. The lender, but not the British Business Bank, deals with any issues from businesses with an active or historical EFG, including collecting guarantee payments or changing their repayment profile.

  • Guarantee

The CBILS guarantee is to the lender and not the small business.

  • Which lenders are included in the list and can provide similar loans?

The following lenders are accredited:

Accredited lenders

Range of business finance products

ABN AMRO COMMERCIAL FINANCE

Terms Loan and Invoice Finance

ALDERMORE

Asset Finance

ART BUSINESS LOANS

Term Loan

ASKIF

Term Loan

BANK OF IRELAND (NORTHERN IRELAND)

Term Loan and Revolving Credit

BANK OF SCOTLAND

Term Loan

BARCLAYS

Term Loan

BCRS BUSINESS LOANS

Term Loan

BUSINESS ENTERPRISE FUND (WEST & NORTH YORKSHIRE AND THE NORTH EAST)

Term Loan

CALVERTON FINANCE

Invoice Finance and Term Loan

CHAMBER ACORN FUND (HUMBER) LTD

Term Loan

CHAMBER ACORN FUND (HUMBER) LTD

Term Loan

COMPASS BUSINESS FINANCE

Term Loan and Asset Finance

COUNTY ASSET FINANCE

Term Loan and Asset Finance

COVENTRY & WARWICKSHIRE REINVESTMENT TRUST

Term Loan

DANSKE BANK (NORTHERN IRELAND)

Term Loan

DSL BUSINESS FINANCE (SCOTLAND)

Term Loan

ENTERPRISE ANSWERS (CUMBRIA)

Term Loan

FINANCE FOR ENTERPRISE (DONBAC)

Term Loan

FIRST ENTERPRISE

Term Loan

GC BUSINESS FINANCE

Term Loan

GENESIS ASSET FINANCE

Term Loan

HAYDOCK FINANCE

Asset Finance

HITACHI CAPITAL BUSINESS FINANCE

Term loan and Asset Finance

HSBC

Term Loan

LET’S DO BUSINESS GROUP

Term Loan

LLOYDS BANK

Term Loan

MERSEYSIDE SPECIAL INVESTMENT FUND

Term Loan

METRO BANK

Term Loan

NATWEST

Term Loan

NEWABLE (FORMERLY GLE)

Term Loan

ROBERT OWEN COMMUNITY BANKING

Term Loan

SANTANDER

Term Loan

SKIPTON BUSINESS FINANCE

Invoice Finance and Term Loan

SOUTH WEST INVESTMENT GROUP

Term Loan

THE ROYAL BANK OF SCOTLAND

Term Loan

TSB

Term Loan

UKSE

Term Loan

ULSTER BANK (NORTHERN RELAND)

Term Loan

Summary


CBILS is a new temporary measure only. After the end of the epidemic or stabilization of the situation, this approach will be terminated.


The UK Government, the British Business Bank and the lenders are in the process of defining and agreeing the CBIL scheme’s details, specifications and eligibility. Therefore, the information regarding CBILS may be changed and updated in the coming days.


Lef Coronavirus Business Interruption Loan Scheme
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For further information on any of the points above contact

Mikita Makayou at mikita@lexefiscal.com, or

Dr. Frank at clifford.frank@lexefiscal.com.

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