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  • Overview

    The current information on the schemes available to businesses can be found here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses.

    One scheme which may be particularly relevant (but not a panacea) for small to medium businesses is the Coronavirus Business Interruption Loan Scheme (CBILS).

    The scheme was launched week commencing 23 March 2020 and it involves the British Business Bank (through its participating lenders) offering lending and overdraft facilities of up to £5m to small and medium-sized businesses. The terms are up to six years for term loans and up to three years for overdraft facilities. There will be no fee for smaller businesses to access CBILS. The aim is to support UK businesses with finance during the coronavirus outbreak.

    The government will be providing the lenders with a partial guarantee of the outstanding facility amount (subject to a cap on claims for each lender). The government will also be covering the first twelve months of interest payments and any other fees imposed by lenders during this period. However, businesses will need to be clear on what interest rate will apply after this period and the fact that the business will still always remain liable to repay all of the capital.  

    The scheme has subsequently been expanded and lenders will be operating the expanded scheme from Monday 6 April 2020. The British Business Bank has explained that the expanded scheme should be applied retrospectively to 23 March 2020. This may be of particular importance to any businesses that have entered into a CBILS facility or another commercial facility since 23 March 2020.  

    In particular, under the expanded scheme, it is no longer a requirement for the business to have insufficient security and the scheme will be open to those businesses that would have previously been eligible for a normal commercial loan.  This will open up the scheme to a larger number of businesses.  The British Business Bank website suggests that if you have previously been refused CBILS, it may be worth contacting your lender again given the changes to the scheme. 

    In relation to personal guarantees, it has been confirmed that lenders will not take a personal guarantee for any facility of less than £250,000. It is up to the individual lender as to whether they require a personal guarantee for a facility above £250,000. However, any personal guarantee will be capped at 20% of the outstanding facility amount (after having taken into account the proceeds of sale after selling any business assets). Any personal guarantee or security for a CBILS loan cannot be taken over a principle private residence (i.e. a business owner’s home).  

    The full rules of the scheme (including eligibility criteria) and the list of lenders is available on the following website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/.

    In relation to eligibility, the business must be UK-based in its business activity and not have a turnover greater than £45 million per annum. It is also important for businesses to note that the CBILS requires you to have a borrowing proposal which a lender would have considered viable were it not for COVID-19. The business will also need certify that it has suffered negatively as a result of COVID-19.   

    There also a number of organisations and industries which will not be eligible for the scheme and these are also set out on the British Business Bank website. 

    Further details and further eligibility criteria are published on the websites above. 

    The British Business Bank are also due to publish details later this month in relation to a new Coronavirus Large Business Interruption Loan Scheme (CLBILS). This scheme will apply to businesses with a turnover of between £45m per annum and £500m per annum. CLBILS will allow lenders to offer loans of up to £25m with a government guarantee of 80%. We will update this page when further details of the CLBILS are announced.  

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