Coronavirus Business Interruption Loan Scheme

The Coronavirus Business Interruption Loan Scheme (CBILS) offers financial support to smaller businesses across the UK that are losing revenue as a direct result of the Coronavirus (COVID-19) pandemic.

The purpose of the Scheme is to offer urgent cashflow to SME’s. From 6 April 2020, the government has expanded CBILS to enable more viable businesses negatively affected by COVID-19 to apply for a loan or overdraft facility.

The CBILS is planned to operate for 6 months from 23 March 2020 and so if your business needed further funds later on, within the six month operative period for the Scheme, you will be able to apply up to 23 September 2020.

Is my business eligible for funding through the newly expanded CBILS?

Previously, many small businesses who could access financial support on commercial terms found they were ineligible for CBILS, when they approached their lender.

The updated Scheme now enables businesses who meet the requirements for a standard commercial facility to apply for the Scheme. Under the new rules in place from 6 April 2020, the government expects many more businesses to be eligible and to be able to access the funds they need.

Being unable to provide sufficient security for the loan financing required is no longer a condition to access the scheme.

What if I previously applied for CBILS but my loan proposal was declined?

If your business was previously unsuccessful in securing funding through CBILS, you may consider re-contacting your lender under the new eligibility criteria.

If one lender turns you down, you can still approach other lenders within the scheme.

What if I have been previously offered a commercial (non-CBILS) loan?

For any commercial (non-CBILS) facilities offered since 23 March 2020, providing the business meets the CBILS eligibility, lenders have been asked to bring these facilities onto CBILS wherever possible and changes retrospectively applied as necessary.

What qualifying criteria must my business meet to apply for CBILS?

The scheme is for UK-based businesses with a turnover of no more than £45million; this includes:

  • Sole traders;
  • Freelancers;
  • Body corporates;
  • Limited partnerships; and
  • Limited liability partnerships.

Certain sectors and types of trade are not able to access the scheme, please see the British Business Bank website here.

For groups, more than one company can be considered but only if the consolidated group turnover does not exceed the £45 million annual turnover threshold.

Your business must:

  • Have a borrowing proposal which the lender would consider viable were it not for the current pandemic;
  • Self-certify that it has been adversely affected by the Coronavirus (COVID-19);
  • Generate more than 50% of its turnover from trading activity.

What are the conditions of use of the loan?

  • The loan must be primarily used to support trading in the UK;
  • The loan must be used for business purposes; and
  • Your business must have been adversely affected by COVID-19.

How is the loan offered?

A lender can provide up to £5million in the form of:

  • Term loans;
  • Asset finance
  • Overdrafts; and
  • Invoice finance.

What are the finance terms and security required?

  • For term loans and asset finance, repayment is 6 years;
  • For overdrafts and invoice finance, repayment is 3 years;
  • No personal guarantees are required for facilities under £250,000;
  • Personal guarantees may still be required, at the lender’s discretion, for facilities above £250,000 but these cannot include the Principal Private Residence (PPR). Recoveries are capped at a maximum of 20% of the outstanding balance of the facility, after the proceeds of business assets have been applied;
  • The borrower remains liable for 100% of the debt;
  • The lender receives a guarantee of 80% of the loan amount from the government; and
  • The Government will cover the first 12 months of interest payments and arrangement fees of the facility, in most cases.

How do I apply for CBILS?

  • CBILS is delivered through the British Business Bank’s accredited lenders, which are listed on the British Business Bank website;
  • Contact your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly; and
  • Lenders will need further information to confirm eligibility, final decisions remain with the 40+ accredited lenders.

What supporting documents might I need to apply?

  • Management accounts;
  • Cash flow forecast;
  • Business plan;
  • Historic accounts; and
  • Details of assets.

A number of our clients are finding that not all of the above documentation is necessary and requirements differ between lenders, therefore we suggest that you contact your lender in the first instance to understand the documents that they will require.

How M+A can help you:

M+A Partners can help support you in preparing and/or providing any of the necessary documents for your application to your chosen lender in order to apply for the Coronavirus Business Interruption Loan Scheme.

We are here to help and support you when you need us most, please get in touch with your usual M+A Partners contact or email enquiries@mapartners.co.uk.