COVID-19 - Business Interruption Loan
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
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. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
You are eligible for the scheme if:
- your business is UK based, with turnover of no more than £45 million per year
- your business meets the other British Business Bank eligibility criteria
How to access the scheme
The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.
You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
The scheme will be available from early next week commencing 23 March.
At Budget 2020 on Wednesday 11 March, the Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme’, and that it would become available ‘over the coming weeks’.
This has been brought forward, and we now expect the new scheme to become available in week commencing 23 March 2020.
As well as loans, there are many other types of finance supported by the programme, depending on the provider. You can find out what type of finance they provide on our partner page by following the link below.
It will be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, 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 enabling a ‘no’ credit decision from a lender to become a ‘yes’. NB – the borrower always remains 100% liable for the debt.
The Government will also cover the first 12 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 (the original announcement suggested a maximum value of £1.2 million.)
Disclaimer: We are in the process of defining and agreeing the scheme’s details, specifications and eligibility and therefore information is subject to change. We will be updating our webpages to reflect any changes to CBILS as and when they are published.
CBILS SUPPORTS A WIDE RANGE OF BUSINESS FINANCE PRODUCTS, INCLUDING:
- Term facilities
- Invoice finance facilities
- Asset finance facilities
TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST:
- Be UK based, with turnover of no more than £45 million per annum
- Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations – see below)
- 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
- Be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term
NB Full eligibility criteria will be published when the scheme goes live w/c 23 March 2020
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.
To apply for an CBILS-backed facility, businesses may wish to consider approaching one or more participating lenders to discuss their borrowing needs.
Please note that a limited number of further eligibility restrictions and/or limitations do apply. Full details can be found here. Almost all business sectors are eligible, however there are a small number of excluded/restricted sectors arising primarily from EU de minimis-State aid rules.
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We'll explain the resources available to you and your business.
- Job Retention Scheme
- Deferring VAT payments
- Deferring Income Tax payments
- Business Tax – Time to Pay Scheme
- Statutory Sick Pay relief package for SMEs
- Business rates holiday
- Grant funding for all business in receipt of small business rate relief or rural rate relief
- Grant funding for retail, hospitality and leisure businesses
- Business Interruption Loan Scheme
- Bank of England lending facility
- Increase to Working Tax Credits
- Universal Credit
- Mortgage Holiday for 3 months.
- Insurance Cover
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