Monday 23 March 2020 marks the launch of the Coronavirus Business Interruption Loan Scheme (CBILS) to support SMEs across the UK. Find out how CBILS can help you and how to apply.
The scheme was first announced in Chancellor Rishi Sunak’s Budget on Wednesday 11 March 2020. Promising to help SMEs in the UK who are experiencing cash-flow problems due to experiencing lost or deferred revenues because of the COVID-19 pandemic. CBILS was established to aid SMEs with term loans, overdrafts, invoice finance and asset finance.
British Chambers of Commerce’s Head of Economics, Suren Thiru stated:
“The Coronavirus Business Interruption Loan Scheme is a crucial step in getting credit flowing to firms who urgently need it during this difficult period. The inclusion of an overdraft facility in the scheme is particularly welcome to those who are facing an immediate and significant loss of cash-flow.”
In an effort to maintain confidence in funding SMEs, CBILS encourages lenders to approve credit by providing a government-backed 80% guarantee against outstanding facility balance to lenders. British Business Bank has accredited more than 40 lenders for this scheme. They range from high-street banks, asset-based lenders, challenger banks and specialist local lenders.
Key Benefits for SMEs
Up to £5 million Loan – A £5m facility is available on a repayment term of up to 6 years.
No fee for SMEs to access Loan – The lenders will have to pay a fee to access the scheme.
12 months interest-free – Sunak announced on 20 March that the interest-free period has increased from 6 months to 12. Resulting in SMEs not having any upfront fees and initially, repayments being lower.
Finance Terms – For term loans and asset finance facilities, the finance terms are up to 6 years. Whereas overdrafts and invoice finance facilities are up to 3 years.
Security – At the discretion of the lender, for facilities of £250,000 or less, the scheme can be used for unsecured lending. However, for facilities above £250,000, the lender must establish a lack or absence of security before they can be approved for CBILS. If the lender can provide finance on normal commercial terms without utilising the scheme, they will do so.
Criteria for Eligibility
SME must be based in the UK.
Turnover cannot exceed £45m per year.
Possess a borrowing proposal which would have been deemed viable by the lender prior to the pandemic. The lender must feel confident that the financial aid will enable your SME to trade out of any short-to-medium term difficulty.
Making a Claim
Firstly you will need to contact your current provider via their website. We recommend using lenders’ websites as it’s expected there will be a large influx of telephone inquiries due to the launch of this scheme and social distancing.
If your provider is unable to give you the required finance, please consider contacting other lenders. It is important to note the lenders are responsible for making the decision of whether an SME is eligible or not for CBILS.
British Business Bank has created a useful list of FAQs regarding CBILS, which you may find invaluable in helping you through the application process.
If you require additional advice on CBILS or have questions regarding other subject matters, please contact a member of our team today at [email protected]
UPDATE: Friday 3rd April – Covid-19: Business Interruption Loan Scheme Amended