Large business is now eligible for Interruption Loans & SMEs are offered more flexibility - CBILS Enhanced

April 7, 2020

On Friday, 3 April the UK Chancellor Rishi Sunak took further action to support firms affected by the pandemic by bolstering Coronavirus Business Interruption Loan Scheme (CBILS) for small businesses and announced a new scheme for larger companies called the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

Highlights from the Chancellor’s speech include (data courtesy, HM Treasury and GOV.UK)

- £90 million of business interruption loans approved for nearly 1,000 firms and £1.9 billion corporate finance provided to firms hit by COVID-19

- Current loan scheme extended so more small businesses can benefit

- Lenders banned from requesting personal guarantees on loans under £250,000

- The new scheme announced to bolster support for larger firms not currently eligible for loans

Enhanced CBILS (data courtesy, HM Treasury, GOV.UK and British Business Bank):

> Smaller Businesses

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 COVID-19 can access the funding they need.

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. 

Insufficient security is no longer a condition for accessing the scheme. This significantly increases the number of businesses eligible for the scheme. And the expanded scheme has been operational with lenders from Monday 6 April 2020.

The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals. The government will continue to cover the first twelve months of interest and fees.

However, for facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but 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.

Updated Eligibility Criteria:

- Your application must be for business purposes and the business must have been adversely impacted by the Coronavirus (COVID-19)

- You must be a UK-based SME with an 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

- You wish to borrow up to a maximum of £5m. (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)

- You should not operate in one of the sectors that are not eligible, including banks, building societies, insurers and reinsurers, the public sector, membership organisations or trade unions

- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic

As a reminder, access to the scheme has now been opened up to smaller businesses facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. You may, therefore, consider re-contacting your lender if you have previously been unsuccessful in securing funding.

> Larger Businesses:

CLBILS is set to ensure that more firms are able to benefit from government-backed support during this difficult time. It will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. This will give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month, so stay tuned for updates as they happen.

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