Coronavirus Business Interruption Loan Scheme

Further information has now been published regarding the Coronavirus Business Interruption Loan Scheme (CBILS), which is now open for applications.

The Loan Scheme is designed to support businesses during the coronavirus pandemic. It supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance. 

In order to access this scheme, you will require a viable business plan, cash flow forecasts and management information. If you are looking to apply for this scheme, we can assist clients with these. Please contact us to discuss how we can help with this to ensure your application is robust.

Note that to be eligible, your business must generate more than 50% of its turnover from trading activity. This, therefore, may exclude property rental businesses from being eligible, amongst other business types.

Planned Changes

In a news release on 3 April 2020, The Chancellor announce additional measured to bolster business interruption loans for small businesses also announced a new scheme for larger companies. We will update this article, when these have been fully published.

The announcement explained that the scheme will be extended for all viable small businesses affected and not just those unable to secure regular commercial financing, to be eligible to apply for a loan.

Other measures announced include those to prohibit lenders requesting personal guarantees for loans under £250,000 together as well as making operational changes to speed up lending approvals. the revised loans will be available for application from Monday 6 April 2020.

Key Features of the Coronavirus Business Interruption Loan Scheme

  • Up to £5m facility, available on repayment terms of up to six years
  • No guarantee fee for SMEs to access the scheme
  • Interest and fees paid by the Government for 12 months
  • Finance terms available for up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years
  • 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 CBIL

It is important to note that the borrower always remains 100% liable for the debt, the 80% guarantee is for the lender. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, it will do so.

Am I eligible for the Coronavirus Business Interruption Loan Scheme?

  • Your application must be for business purposes
  • You must be a UK-based SME with annual turnover of up to £45m 
  • Your business must generate more than 50% of its turnover from trading activity
  • Your CBILS-backed facility will be used to support primarily trading in the UK 
  • Finance terms are to six years for term loans and asset finance. For overdrafts and invoice finance facilities, terms will be up to three years 
  • The British Business Bank states that in the first instance, businesses should approach their own provider – ideally via the lender’s website, or existing relationship manager. Businesses may also consider approaching other lenders if they are unable to access the finance they need for their existing provider. Some providers are only offering the facility to existing customers.
  • There are over 40 accredited lenders. Not every accredited lender can provide every type of finance available. The full list is available on the British Business Bank website here.

Other important information

  • The business must have been a viable business before the COVID-19 affected the business
  • Franchises are eligible
  • It can be used to support acquisitions IF the acquisition adds value to the business.  It cannot be used for share buybacks or similar

Information required by your business

As highlighted above, in order to apply for the scheme, businesses will need to provide:

  • A viable business plan
  • Cash flow forecasts showing that the repayments can be supported and factoring in items such as delayed tax payments
  • Prior management information

Further information from The British Business Bank on the Coronavirus Business Interruption Loan Scheme can be found here.

How Alexander & Co can assist your business

Wherever you are in the UK, please contact us if you require assistance with business plans, cash flows and management information. We can also advise on other options that may be available to you to help safeguard your business during the Coronavirus outbreak.

To get in touch, simply email or fill out the form below and we’ll be in touch.

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