What it is
As part of the measures announced in Budget 2020, the Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme’ (CBILS). This new scheme is expected to become available on 23 March 2020.
CBILS will be provided by the British Business Bank through participating lenders. The aim is to offer more attractive terms for businesses applying for new facilities with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.
The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially changing a lender’s ‘no’ credit decision to a ‘yes’. Legally the borrower always remains fully liable for the debt.
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
What is covered
The type of finance products encompassed by CBILS include:
• Term facilities
• Invoice finance facilities
• Asset finance facilities
There are a few conditions to be met by business wanting CBILS finance:
• 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)
• Be able to confirm that they have not received de minimis State Aid beyond €200,000 equivalent over the current and previous two fiscal years
• Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements
The fine print
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.
Excluded sectors are insurance, banking and education, while reduced CBILS support is available for agriculture, care homes and the private healthcare sector.
The State Aid definition incudes such schemes as SEIS and EIS. In order to qualify for the BILS scheme, any business which has received over €200,000 of State Aid per annum in the current and last two financial years cannot qualify for the scheme.
What to do now
Over 40 financial institutions are participating in the CIBLS scheme, including all the high street banks.
Given the current uncertainty and climate rest assured we are here to help all our clients ensure business continuity and we hope you found this article helpful. As the details of the CIBLS scheme are still being worked out, we can work with you and support you in your dealings with financial institutions in order to seek any available funding.
Our expert team is available to provide you with advise and can be contacted on 01273 326 556 or you can drop us an email at firstname.lastname@example.org or speak with an account manager to get any process started.