Coronavirus Business Interruption Loan

Coronavirus Business Interruption Loan

The new Coronavirus Business Interruption Loan Scheme (CBILS) supports SMEs with access to working capital (including loans, overdrafts, invoice finance and asset finance) of up to £5 million in value and for up to 6 years.

This is a loan, not a grant. You will be required to pay this back in the future.

The government will pay to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will not face any upfront costs and will benefit from lower initial repayments.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.

This scheme is being delivered through commercial lenders, backed by the British Business Bank.

You are eligible for the scheme if:

  • your business is UK based, with a turnover of no more than £45 million per year
  • your business meets the other British Business Bank eligibility criteria (see website for further details)
  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

How to apply for a CBILS loan

  • To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites.
  • All major banks are offering this scheme. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
  • The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.

Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.

No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.

Decision-making on whether you are eligible for CBILS is fully delegated to the 40+ accredited CBILS lenders. These lenders range from high-street banks, to challenger banks, asset-based lenders and smaller specialist local lenders.

In the first instance, businesses should approach their own provider – ideally via the lender’s website. You may also consider approaching other lenders if you are unable to access the finance they need.

Note: if the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.

Consider the urgency of your need – it is possible that some businesses may be looking for regular longer-term finance rather than ‘emergency’ finance, and there may other businesses with a more urgent need to speak with a lender 

This information was sent to us from PSF Accounting http://psfaccounting.co.uk/ and is intended for you to share.