The Coronavirus Business Interruption Loan Scheme (“CBILS”)

25 Mar 2020

The CBILS went live on 23 March 2020 and will initially run for six months. It is a new scheme that aims to provide facilities of up to £5m for Small and Medium Enterprises (SMEs) with a borrowing proposal that shows, were it not for the COVID-19 pandemic, their business would be considered viable by the lender, and for which the lender believes the provision of finance will enable their business to trade out of any short-to-medium term difficulty.

The British Business Bank has produced some guidance on the CBILS, which is summarised below. The full text of the guidance can be found at: British Business Bank FAQs for SMEs.

What is the CBILS?

The CBILS works by providing an accredited lender with a government-backed partial (80%) guarantee against the outstanding facility balance. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and lender fees for facilities granted under the scheme. Facilities provided under the scheme include overdrafts, invoice finance, term loans and asset finance.

Who is eligible?
Any UK-based business with an annual turnover of no more than £45m that is unable to meet a lender’s normal financing requirements for a fully commercial financing, due to the Coronavirus pandemic.
This is subject to not being an ineligible business or organisation and not having received more than de minimis state aid.

The following are ineligible: banks, building societies, insurers and reinsurers (but not insurance brokers); the public sector; employer, professional, religious or political membership organisations; and trade unions.

How to apply:

The CBILS is available through the British Business Bank’s 40+ accredited lenders. A list of accredited lenders can be found on the British Business Bank website and they range from high-street banks to challenger banks, asset-based lenders and smaller specialist local lenders.

CBILS guarantees facilities up to a maximum of £5m available on repayment terms up to six years for term loans and asset finance. For overdrafts and invoice finance facilities, terms will be up to three years. The Scheme does not preclude lenders from requiring personal guarantees to support the underlying loan, which would remove the protection of limited liability and make the scheme the scheme less attractive.

If you would like advice on the Coronavirus Business Interruption Loan Scheme, please get in touch Gwen Godfrey or Michael Wrigley by phone or by email, or with your usual contact at DMH Stallard LLP.

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