The Coronavirus Large Business Interruption Loan Scheme, also known as ‘CLBILS’ opened on Monday 20 April 2020.
CLBILS is designed to provide financial support for medium to large businesses across the UK, who are losing revenue or suffering cash flow disruptions as a result of the COVID-19 pandemic.
The scheme is part of a wider package of emergency support introduced by the government over the last few weeks. It supplements ‘CBILS’ - Coronavirus Business Interruption Loan Scheme - which was launched on 23 March 2020 to support SME’s (See our related article: UPDATED: COVID-19: Understanding how the business interruption loan scheme can help your organisation).
The Coronavirus Large Business Interruption Loan Scheme is designed to help businesses which are unable to access CBILS due to exceeding the permitted turnover threshold.
CLBILS is available through a range of lenders accredited by the British Business Bank.
Since its introduction, Lenders have been able to provide:
- Up to £25 million to businesses with a turnover of between £45 million to £250 million; and
- Up to £50 million to businesses whose turnover exceeds £250 million.
However, following HM Treasury’s announcement on 19 May, several changes to the CLBILS scheme have taken effect from 26 May.
The maximum amount available through CLBILS to a borrower and its group has now increased from £50m to £200m. Term loans and revolving credit facilities over £50m will be offered by CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance and asset finance facilities remains at £50m.
Companies borrowing more than £50m through CLBILS will be subject to further restrictions on dividend payments, senior pay and share buy-backs during the period of the loan.
Further information on changes introduced on 26 May, including new provisions on seniority of CLBILS facilities, can be found in the British Business Bank - CLBILS FAQs for businesses.
The finance is available on a range of facilities including term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance, which range in terms of between 3 months to 3 years.
The government has also extended the 80% guarantee to CLBILS facilities, meaning that lenders have an element of comfort in loaning these large sums.
In terms of security, the Coronavirus Large Business Interruption Loan Scheme reflects the already established principles applied to CBILS in relation to personal guarantees. Under the CLBILS, lenders will not take personal guarantees for facilities below £250,000. Lenders may require personal guarantees for facilities over £250,000, however these cannot exceed 20% of losses after all other recoveries have been applied.
In order to by eligible for CLBILS, businesses must satisfy the following criteria:
- Be UK-based in its business activity.
- Have an annual turnover of more than £45 million.
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty.
- Self-certify that it has been adversely impacted by the coronavirus (COVID-19).
- Not have received a facility under the Bank of England’s COVID Corporate Financing Facility (CCFF) (See our related article: COVID-19: Understanding how the COVID Corporate Financing Facility (CCFF) can help your organisation)
The full rules of the scheme (including eligibility criteria) and the list of lenders, is available on the British Business Bank's Website.
For businesses seeking to apply to for Coronavirus Large Business Interruption Loan Scheme, they are advised to approach their existing lenders in the first instance, preferably via their website.
Once an application has been submitted, the lender will make a decision as to whether it can offer finance. If one lender refused an application, businesses can still approach other lenders within the scheme.
Please do not hesitate to contact us if we can assist with any queries or application paperwork. Our Banking & Finance Team is on hand to advise in relation to the legal aspects of the standard application documents.