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Coronavirus Business Interruption Loan Scheme (CBILS) – what we know so far

Source material – British Business Bank webpage on CBILS

Launch date

The British Business Bank now expect the new scheme to become available in week commencing 23 March 2020.

Overview

As advised previously, CBILS will operate like the Enterprise Finance Guarantee Scheme and:

  • The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. NB – the borrower always remains 100% liable for the debt.
  • It will be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.
  • The Government will also cover the first 6 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital. The maximum value of a facility provided under the scheme will be £5 million pounds (the original announcement suggested a maximum value of £1.2 million.)
  • Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

Eligibility criteria

  • Be UK based, with turnover of no more than £41 million per annum
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support – see below)
  • Almost all business sectors are eligible, however there are a small number of excluded/restricted sectors arising primarily from EU de minimis-State aid. An in-depth list of the main sectoral and purpose restrictions can be found here
  • Have a sound borrowing proposal, but insufficient security to meet a lender’s normal requirements
  • Be able to confirm that they have not received de minimis State Aid beyond €200,000 equivalent over the current and previous two fiscal year

Use of and application process

  • An accredited lender can use CBILS to help a borrower access from, from £1,000 to £5 million
  • To apply for an CBILS-backed facility, businesses may wish to consider approaching one or more participating lenders to discuss their borrowing needs.
  • CBILS supports a wide range of business finance products, including:
  • Term facilities
  • Overdrafts
  • Invoice finance facilities
  • Asset finance facilities

We shall be keeping eyes and ears open for further clarification and will post further updates once we have them.

If you would like to read about State Aid (specifically in the context of CBILS), click here.

FEATURING: Richard Wadman
Richard qualified as a Chartered Accountant with KPMG in 1993. Since 2006 he has worked in Corporate Finance, firstly with the predecessor firm in Truro… read more
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