Coronavirus Business Interruption Loan Scheme (CBILS)

About CBILS  

The Coronavirus Business Interruption Loan Scheme (CBILS), delivered through 40+ British Business Bank accredited lenders and partners, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow. It supports a wide range of business finance products,  including term loans, overdrafts, invoice finance and asset finance facilities. Please note that for term loans and overdrafts, the minimum amount a lender can offer under CBILS is £50,001.

The Coronavirus Business Interruption Loan Scheme (CBILS) has been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the Coronavirus crisis can access the funding they need.

Insufficient security no longer a condition to access the scheme.

Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme. The expanded scheme will be operational with lenders from Monday 6 April 2020.

New Scheme Features

New Scheme Features

  1.  No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
  2. Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but 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. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility.
  3. Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment(1)

1 Please note that where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility

Existing Scheme Features

  1. Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years.
  2. No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
  3. 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 (2), so smaller
    businesses will benefit from no upfront costs and lower initial repayments (3).
  4. 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.
  5. Guarantee to the lender: The scheme provides the lender with a government backed, guarantee against the outstanding facility balance.
  6. Principal Private Residence (PPR) – A borrowers/guarantors PPR cannot be taken as security to support a Personal Guarantee
    or as security for a CBIL backed facility.
  7. The borrower always remains 100% liable for the debt.

Important Note

The scheme changes should be retrospectively applied by lenders for any CBILS facilities offered since 23 March 2020. For any commercial (non-CBILS) facilities offered since the same date, providing the borrower meets
the CBILS eligibility criteria, lenders have been asked to bring these facilities onto CBILS wherever possible (e.g. where the lender is accredited to offer the same facility through CBILS) and changes retrospectively applied as necessary.

Note: The borrower always remains 100% liable for the debt.

(2) Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM Government greatly
appreciates this approach by lenders.
(3) Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.

New Eligibility Criteria

New eligibility criteria

  1. Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, a smaller business must: Be UK based in its business activity, with turnover of no more than £45m per year.
  2. Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.
  3. Self-certify that it has been adversely impacted by the Coronavirus (COVID-19).

Please note: The following are not eligible under CBILS:

  1. banks, insurers and reinsurers (but not insurance brokers),
  2. public sector bodies,
  3. further educational establishments if they are grant funded, and
  4. state funded primary and secondary schools.

How does a small business apply for a CBILS-supported facility?

CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank
website. 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. Not every accredited lender can provide every type of finance available under CBILS.

Decision-making on whether a small business is 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, businesses should:

  1. 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 enquiries due to social distancing
  2. Consider the urgency of their need – it is possible that some businesses may be looking for regular longer-term finance rather than ’emergency’ finance, and there may be other businesses with a more
    urgent need to speak with a lender.

Important Information

Please note: As with any other commercial transaction, the borrower is always responsible for repayment of the full value of any facility supported by CBILS.

Please note: The guarantee is to the lender, and not the small business.

Any queries from a business with an active or historic EFG facility, including guarantee fee collection or alterations to their repayment
profile should raise them with their lender, and not with the British Business Bank.

LEGAL NOTICES

The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and industrial Strategy (BEIS).

British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA).

Full details on CBILS and the list of participating CBILS lenders can be found on the British Business Bank website at: http://www.british-business-bank.co.uk/CBILS