A quick guide to the Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) has been opened up to a wider range of businesses.

The Scheme provides UK-based SMEs with turnovers of up to £45 million access to facilities of between £50,000 and £5 million interest-free for 12 months, backed by an 80 per cent guarantee from the Government.

Am I eligible? 

The British Business Banks says that businesses that meet the following conditions must be considered for CBILS:

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million, of which more than 50 per cent is generated through trading activities
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19).

Full details of eligibility and an FAQ link to the British Business Bank can be found here.

What finance can I access?   

Funding can be in the form of loans, overdrafts, invoice financing or asset finance, although each lender will be able to choose which elements of the scheme it supports.

Facilities are available from £50,000 to £5 million, subject to a lender’s criteria. CBILS will be interest-free for the first 12 months, as the Government has guaranteed to cover these payments during this period. No setup fee will be charged.

Am I liable for all of the debt? 

The borrower remains 100 per cent liable for the debt. An 80 per cent guarantee offered by Government is simply to provide some recourse for the lender in the event of a borrower defaulting on their debt.

Do I need to provide a personal guarantee?

Lenders can only require personal guarantees for facilities of £250,000 or more. However, where personal guarantees are required:

  • they exclude the Principal Private Residence (PPR), and
  • recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

I’ve previously been turned down for a CBILS facility because I qualified for a commercial loan, can I re-apply?

Yes, the British Business Bank is encouraging businesses in this situation to contact their lender again following the change in the rules.

How do I apply? 

You will need to submit a detailed application for the funding you need to the lender. This will vary from lender to lender.

The British Business Bank also advises that you will need to provide certain evidence to show that you can afford to repay the loan. For larger facilities, this may include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of business assets

The above requirements will also vary from lender to lender. If you do not have access to everything listed above, that does not mean you will be ineligible for a CBILS loan, but it may affect your ability to access finance.

The British Business Bank has indicated that it may be beneficial to seek finance first through a lender that you have an existing relationship with.

To begin the application process, please click here.

For more information, please get in touch with your usual Milsted Langdon contact or email advice@milstedlangdon.co.uk. And see our latest coronavirus advice and guidance on our Covid-19 Business Support Hub.

Posted in Blog.