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Coronavirus Business Interruption Loan Scheme (CBILS)

Find out the latest information about the Coronavirus Business Interruption Loan Scheme (CBILS).

This page was updated on 3 November 2020.

 

*The government has extended the deadline for new applications to 31 January 2021*

What is it?

CBILS is a scheme that is designed to provide debt finance of up to £5m for smaller businesses across the UK, which are experiencing lost or deferred revenues as a result of the COVID-19 outbreak. From term loans and overdrafts and invoice finance and asset finance, the initiative supports a range of products.

Finance through the scheme can be accessed through more than 60 providers found here. If one lender turns you down, you can still approach other lenders within the scheme. If you are based in the North West, GC Business Finance can provide loans. Please see here for full details on eligibility for GC Business Finance specifically.  

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.

In response to feedback received since the scheme’s launch, the Chancellor is taking further action by extending the scheme so that all viable small businesses affected by Covid-19, and not just those unable to secure regular commercial financing, will now be eligible. This change is designed to enable all long-term viable businesses experiencing difficulties as a result of the coronavirus outbreak to access finance. The expanded scheme will be offered by lenders from Friday 3 April 2020 and operational from Monday 6 April 2020.

In addition, businesses located across Greater Manchester and Lancashire can obtain fully-funded advice from the Growth Hub’s Access to Finance team.

 

Is my business eligible?

Your business must fall into these points of eligibility:

  1. Be UK-based in its business activity, including SMEs which are foreign-owned provided they are trading in the UK. 
  2. Be an SME with an annual turnover of no more than £45 million. If the SME is part of a larger group, the cap applies to the group undertaking.
  3. The scheme is also open to sole traders and freelancers provided the business activity is carried out through a business account and annual turnover does not exceed £45m.
  4. Previous de minimis state aid does not impact your eligibility for CBILS
  5. Have a borrowing proposal which the lender:
    • would consider viable, were it not for the COVID-19 pandemic
    • believes will enable you to trade out of any short-term to medium-term difficulty
  6. Export businesses are in principle eligible, the loan cannot be used for certain activities outside of the UK. 

 Businesses from any sector can apply, except the following:

  • Banks and building societies
  • Insurers and reinsurers (but not insurance brokers)
  • Public-sector organisations, including state-funded primary and secondary schools

Eligibility criteria outlined by the British Business Bank can be seen here with FAQs answered here. It is also important to note that lenders may have additional eligibility criteria and we recommend that you check these prior to preparing your application.

All lenders will have their own application procedure and we recommend that you visit your chosen supplier’s website to obtain more information. However, it is likely that most lenders will ask you for the following:

Details of the loan

  • The amount you would like to borrow
  • What the money is for — the lender will check that it’s a suitable business purpose and the right type of finance for your needs
  • The period over which you will make the repayments — the lender will assess whether the loan is affordable for you

Supporting documents

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

The above requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

For early-stage businesses in their first two years of trading, the British Business Bank’s Start Up Loans programme may be more suitable. Additionally, on the 20th of April, the Government announced a further £1.25bn of funding for UK innovative firms which are pre-revenue generating, through the Future Fund and Innovate UK Loans & Grants, find out more here

What are the key takeaways of the scheme? 

Takeaway points:

  • The scheme went live on Monday 23 March and will initially run for six months. On 24 September, the Chancellor extended the deadline for new applications to 30 November 2020. 
  • CBILS guarantees facilities up to a maximum of £5m. It is available on repayment terms up to 10 years for term loans (was extended from the initial six year repayment terms during the Chancellor's outline of the Winter Economy Plan on 24 September) and asset (equipment) finance and up to three years for overdrafts and invoice finance facilities
  • The Government will make a (Business Interruption) Payment to cover the first 12 months of interest payments and any lender-levied fees. This means that your business should not incur any upfront costs and will benefit from lower initial (first 12 months) repayments.
  • At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. This means that there is no automatic right to obtaining an unsecured loan, but if the lender agrees a facility then there is no requirement for you to provide a personal guarantee.
  • For facilities above £250,000, there may be a requirement, at the discretion of the lender, for you to provide a personal guarantee for a maximum of 20% of the value of the facility. This means that there is no automatic right to obtaining an unsecured loan, but if the lender agrees a facility then you may be required to provide a limited personal guarantee.
  • Primary Residential Property (PPR) cannot be taken as security under the scheme. This means that if you are offered a facility under the CBILS then you will not be asked to provide a legal charge over your home
  • It’s important that you are aware that you, the borrower, will always remain 100% liable for the debt. The CIBLS guarantee is to the lender, not you, the SME.
  • The scheme is demand-led and funding will remain available for the duration of the scheme. This means that if you do not require immediate support you should still be able to apply for the scheme later on as funding will not run out. 

 

Points to consider

In order to protect your business and seek out the best product for your needs, we recommend that:

  • You check carefully any offer of finance that your business receives and make sure that you fully understand the terms of the offer of finance including whether you are being asked to provide any form of security.
  • You take independent legal advice, especially if you are being asked to sign a personal guarantee.

For further help and guidance around Coronavirus related matters, please go to our dedicated Coronavirus Hub, where you can access a wide range of advice and support.

 

GC Business Finance
GC Business Finance provides alternative business finance options for growing businesses that have been unable to obtain funding through a mainstream lender and is a partner of Coronavirus Business Interruption Loan Scheme (CBILS). For more information on eligibility specific to GC Business Finance loans, please see here.   

 

More information is available on the UK Government’s Coronavirus Business Support website. For more personalised advice call us on: 0161 359 3050 or email us at: BGH@growthco.uk

 

This document is intended to be a summary, with commentary and guidance where appropriate, of the CBILS financial support package provided to Businesses during the COVID-19 difficulties. It will be updated as soon as practically possible after new information is made available by Central Government and its partners, but we cannot be held responsible for errors and omissions that may occur. 

The information provided is meant as a general guide only rather than advice or assurance. GC Business Growth Hub does not guarantee the accuracy or completeness of this information and professional guidance should be sought on all aspects of business planning and responses to the coronavirus. Use of this guide and toolkit are entirely at the risk of the user. Any hyperlinks from this document are to external resources not connected to the GC Business Growth Hub and The Growth Company is not responsible for the content within any hyperlinked site.

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