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Many more UK businesses are now eligible for the CBILS

6th April, 2020

On 2 April 2020, the existing Coronavirus Business Interruption Loan Scheme was significantly expanded along with changes to the scheme’s features and eligibility criteria.

This means that many more smaller businesses across the UK impacted by the Coronavirus crisis are now eligible. The newly expanded scheme is now operational.

About the scheme

The Coronavirus Business Interruption Loan Scheme (CBILS) is delivered through a number of accredited lenders. The scheme can provide facilities of up to £5m to SME’s across the UK who are experiencing cash flow disruptions. The scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

Key features

  • Up to £5m facility, repayable on terms of up to 6 years (and up to 3 years for overdrafts)
  • Government backed guarantee against 80% of the outstanding facility balance
  • Interest and fees paid by Government for 12 months
  • The borrower always remains 100% liable for the debt

Key changes

Availability of security. Previously the scheme was only open to smaller businesses who could not access commercial (non-CBILS)  loans (because they did not have sufficient security to give the Bank). One of the key changes announced on 2 April 2020 is that even businesses with security, and therefore having access to a commercial (non-CBILS) loan, may be eligible for CBILS. This significantly increases the number of businesses eligible for the scheme. This will enable many more business to take advantage of the Business Interruption Payment (paid by the Government) which covers the first 12 months of interest payments and any lender-levied fees, therefore benefiting from no upfront costs and lower initial repayments.

No personal guarantees for facilities under £250,000. Initially, PGs could be taken at the Lender’s discretion. The changes implemented now mean that personal guarantees of any form cannot be taken under the scheme for any facilities below £250,000. (Prior to these changes, the Big Four Banks had already confirmed that they wouldn’t take PGs for facilities under £250,000.)

Capped personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, for facilities above £250,000. However,  they will be capped at 20% of the outstanding balance of the CBILS facility, after the proceeds of business assets have been applied.

These changes should be applied retrospectively by Lenders . Providing the borrower meets the CBILS eligibility criteria, where commercial (non-CBILS)  facilities have been offered to the borrower since [23 March 2020], lenders have been asked to bring these facilities onto CBILS wherever possible.

Furthermore, borrowers who may have previously been refused access to the CBILS may now be eligible. They should contact their Bank manager in the first instance.

How we can help

The Banking and Finance team at Aaron & Partners LLP can provide you with help and guidance on the scheme, and also assistance with the documents necessary for implementation.

Zoe Lloyd

Corporate & Commercial

Email: [email protected]
Tel: 01743

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