CBILS made simple: what you need to know

Understand the Coronavirus Business Interruption Loan Scheme (CBILS) and get the support that’s right for your business

What is CBILS?

CBILS is the short name for the Coronavirus Business Interruption Loan Scheme. It’s the new scheme, announced by The Chancellor, to help smaller businesses across the UK who are struggling with cashflow as a result of the current crisis.

Key Details

The scheme covers a range of business funding solutions, including term loans, invoice finance, overdrafts and asset finance facilities. It provides the lender with a government-backed guarantee, which means that a credit decision from a lender could change from ‘no’ to ‘yes’. Key characteristics of the scheme are:

 

  • Loans of up to £5m: The maximum value of a facility provided to you under the scheme will be £5m, to be repaid over a period of up to six years.

  • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee against the outstanding balance of your loan.

  • The government will cover the first 12 months of interest payments, and any lender-related fees, which means no up-front costs in most cases and lower initial repayments for your business.

  • Finance terms: Up to six years for term loans and asset finance facilities, and three years for overdrafts and invoice finance facilities.
    Previously, if a lender could offer you finance on normal commercial terms, you would not be eligible for the CBILS scheme. This no longer applies.

  • Security: At your lender’s discretion, the scheme may be used for unsecured lending for facilities of up to £250,000. For loans above this amount, the lender can ask for a personal guarantee but any recoveries will be capped at 20% of the outstanding balance of the facility, with the government guaranteeing the remaining 80%.

You will remain 100% liable for the debt.

 

How do I apply?

Most banks are participating in the scheme – you can see a list of participating lenders here. You can apply directly to any participating lenders as well as your current bank. Please note that accredited banks and lenders are experiencing a high volume of customer enquiries.

What if my bank isn’t part of the scheme?

If your bank cannot extend your existing finance or is not part of the scheme, our partner Funding Xchange can help you establish options from a range of other lenders. New lenders are added to the platform as they join the scheme, so you should check back to keep your options up to date.

Will I have to use my home as collateral to secure the debt?

No, the government has said that no one needs to put up their home as security to benefit from the scheme.

Is CBILS available to new businesses?

Yes, but you could also consider other sources of finance such as Start-Up Loans, where you can still apply for a start-up loan of up to £25,000, while second loans remain available to eligible existing customers. They have a dedicated support section on their website.

Will all small and medium-sized firms be able to borrow money?

Not necessarily. You will have to prove that you have a viable business, which has been trading successfully before the crisis, but just needs extra support to deal with short term difficulties caused by the current disruption.

Can self-employed people apply?

Yes, if you’re self-employed and have an annual turnover of up to £45m, operate using a business bank account, and generate more than 50% of your revenue from trading activity. It doesn’t matter whether you’re a sole trader, freelancer or a limited partnership.

Is there other support for my business?

CBILS is part of a range of emergency measures that include deferred VAT payments and salary grants of up to 80%. For wider information on how to protect your company, including your people, we suggest checking the government COVID-19 business support website.

The government has also rolled out a package of support for the self-employed as part of its Self-employment Income Support Scheme.

And if you cannot access CBILS funding, you may still be able to access finance. Our partner Funding Xchange helps you get offers from over 40 lenders, both part of, and separate to the CBILS scheme.

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