CBILS - Coronavirus Business Interruption Loan Scheme
The coronavirus business interruption loan scheme (CBILS) is a government-backed funding scheme designed to support UK businesses through the coronavirus outbreak.
The scheme is being administered through 40+ accredited lenders. Below is a guide to the scheme for businesses looking to access it.
What is the CBILS Scheme?
Government initiatives that provide some protection for lenders
The Coronavirus Business Interruption Loan scheme is a government initiative that provides some protection for lenders, by guaranteeing 80% of the amount borrowed, if a business default on loan repayments. It is not designed to act as an insurance policy for borrowers, and borrowers must ensure they meet 100% of loan repayments. The scheme is designed to allow businesses to keep accessing cash through the inevitable downturn that the Coronavirus will create.
It is important to note that the Government is not lending the money. It isn’t even giving money to the accredited lenders to lend out. Each lender decides whether to lend to the borrower or not, using their lending criteria and using their own money. The scheme is very much a backstop for the Lenders.
Key Features
Key features of CBILS
Up to £5m facility
80% guarantee
No fee for SMEs to access the scheme
Interest and fees paid by the Government for 12 months
Finance terms
Security
Lending
Liability
Who Is Eligible?
We have found that being eligible doesn't necessarily equate to lending. Applications need to be presented to the lenders in the correct format.
- The application must be for business purposes
- 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 coronavirus business interruption loan scheme backed facility will be used to support primarily trading in the UK
- You wish to borrow up to a maximum of £5m
- The business must have a borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender
How Do I Apply?
Follow this point for easy apply
In the first instance, businesses should approach their own provider. However, you should be aware of the information they require and it should be provided in one go as drip-feeding it through will result in lengthy delays to the case.
As the scheme has developed it has become common for Lenders to prioritise their existing customers. As an example, if you are banked with Natwest you will not be able to approach Lloyds.
If the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
What Information Is Required?
Some points are required for finance
| Financial | Non Financial |
|---|---|
| Financial accounts covering the last 3 years. | How much do you want ideally? |
| Up to date Management Accounts for this financial year. | How has C-19 affected the business? |
| Up to date Aged Debtors Report- – to match the same time frame as Management Accounts | What measures have you taken to reduce costs. |
| Up to date Aged Creditor Report- to match the same time frame as Management Accounts | Impact on suppliers? – are they reducing their payment terms etc… |
| Any loan schedules (list of loans you have – including pensions- term and monthly amount) | Impact of debtors? – are there risks in them not / delaying paying etc.. |
| A 12-month cash flow forecast | How is the money going to keep the business operating. |
| – | What measures have been taken to ensure the business can pick back up again. |