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:
UK registered business;
Turnover less than £41,000,000 per annum;
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;
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);
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?
If a business wishes to apply for a CBILS, they should apply to one or more of the accredited lenders with their borrowing proposal.
If the accredited lender can offer finance on normal commercial terms (i.e. without CBILS), they will offer it.
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.
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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