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Oakmead Finance Ltd

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Home Coronavirus Business Interruption Loan Scheme

CBILS

Coronavirus business interruption loan schem

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

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 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 the 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

No Personal Guarantees or additional security will be taken for loans under £250,000. For facilities above £250,000 the lender may require Personal Guarantees but the must exclude personal property & recoveries are capped at 20% of the outstanding balance of the CBILS loan.

Lending

If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. Business cannot automatically access the Coronavirus Business Interruption Loan Scheme.

Liability

The borrower always remains 100% liable for the debt.

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.

  1. The application must be for business purposes
  2. You must be a UK-based SME with an annual turnover of up to £45m
  3. Your business must generate more than 50% of its turnover from trading activity
  4. Your coronavirus business interruption loan scheme backed facility will be used to support primarily trading in the UK
  5. You wish to borrow up to a maximum of £5m
  6. 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 image

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.

Apply For Loan Scheme