£330 billion of government backed and guaranteed loans are available on ‘attractive terms’ for any business that needs cash to pay rent or salaries etc.
CBILS was launched on Monday 23 March, followed by CLBILS on 3 April. Both schemes are being delivered by the British Business Bank and are available from an increasing number of accredited providers. They will provide loans of up to £25 million for businesses which are experiencing lost or deferred revenues as a result of COVID-19. The lending facilities can take the form of term loans, overdrafts, asset finance and invoice finance facilities.
Interest and repayment terms
Repayment terms vary from up to three years (for overdrafts and invoice finance facilities) to six years (for term loans and asset finance).
The loans will be interest free for the first 12 months.
Lenders are prevented from requesting personal guarantees for loans under £250,000. Importantly, for loans over £250,000, personal liability under personal guarantees will be limited to just 20% of any amount outstanding on the CBILS lending after any other recoveries from business assets.
There are a number of eligibility criteria which were amended on 3 April so that the scheme is now available to ‘all viable small businesses affected by COVID-19’, To be eligible your business must:
Be UK-based in its business activity;
Have an annual turnover of no more than £45 million for CBILS and £500m for CLBILS;
Have a borrowing proposal which the lender will consider viable were it not for the current pandemic; and
Self-certify that the business has been adversely affected by COVID-19.
Q. Which providers can I approach?
The government encourages you to approach your own provider in the first instance – ideally via their website or directly with your usual contact. You may also want to take this opportunity to talk to us, as we can work with you to advise on your eligibility and the most appropriate facility for your business.
When CBILS was first announced banks were only processing applications from their own customers; however, we understand that certain banks are looking at applications from non-customers. You may therefore also consider approaching other lenders if you are unable to access the finance you need – a list of accredited lenders is available on the British Business Bank website here.. Before you do so, talk to us.
Our COVID-19 Funding Solutions team can access over 100 providers online, and manage the lending process for you – enabling you to focus on other business critical issues. .
Q. What information will I need to submit?
Lenders are being inundated with applications and are prioritising those with all the required information. This may include:
Last 3 years full accounts with detailed P&L;
Last 12 months business bank statements (and potentially also last 6 months personal, depending on the lender);
Up to date management accounts;
Aged debtor and creditor lists;
Confirmation of any outstanding debt (provider, term and repayment details);
Statement of personal assets, liabilities, income and expenditure from all directors;
Home addresses of all directors/shareholders;
A paragraph on how COVID-19 has affected the business and what the funds will specifically be used for; and
12 month cashflow forecasts.
You will also be required to respond to a list of questions relating to the purpose of the loan, the amount requested and how this has been calculated, and your estimate of how long it will take the business to recover.
The precise requirements regarding the information that is required by lenders can be subject to sudden change and is under constant review. We recommend talking to our team before embarking on any loan application.