Coronavirus Business Interruption Loan Scheme (CBILS)

Financial Solutions

The Coronavirus Business Interruption Loan Scheme (CBILS) is designed to assist qualifying businesses during these unprecedented times. It is likely that the scheme will be open for applications commencing from the week of 23 March 2020.

The Scheme aims to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance.  The loan will be provided by the British Business Bank through participating providers during the Covid-19 outbreak.

The types of finance available will include:

  • Term facilities
  • Overdraft’s
  • Invoice finance facilities
  •  Asset finance facilities

CBILS: Key features

  • Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
  • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
  • No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
  • Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
  • 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.
  • Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
  • Loans in the scheme are limited to a maximum of 25% of 2019 turnover or double the annual wage bill, whichever is greater.
  • The High Street Banks, for the most part, are ONLY offering this loan to existing clients.

The borrower always remains 100% liable for the debt.

Once all the details are known MHAFS will be able to help clients apply for the scheme, but I would advise any client thinking about doing so to start preparing the following.

  • Get the last 6 months bank statements in order
  • Obtain latest full year end filed accounts
  • Prepare YTD Management Figures
  • Draft 12 months forecasts

How can I access the scheme?

CBILS is available through the British Business Bank’s 40+ accredited lenders, which are listed on the British Business Bank website here; https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/

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

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.

Given there is likely to be a big demand for facilities once the scheme goes live, we ask you to please:

  • Consider applying via the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquires due to social distancing
  • 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

Worth remembering that the monies are however a loan, and despite favourable terms, loans do need to be repaid.

Get in touch

To discuss any funding requirements, you may have at this exceptional time, or any cash flow related matters, Call 0333 010 0538 or email; finsolutions@mhllp.co.uk

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Financial Solutions