Coronavirus Business Interruption Loan Scheme

COVID-19 is having a significant impact on businesses across the UK. To help those who are experiencing cash flow disruption due to the pandemic, the Government has introduced a series of financial support measures and business loans. One of these measures is The Coronavirus Business Interruption Loan Scheme (CBILS).

Get a CBILS loan

CBILS at a glance:

- Designed for SMEs with a turnover of under £45m

- Up to £5m in finance available

- Loan types include term loans, overdrafts, invoice finance & asset finance 

- First 12 months of interest and lender-levied fees covered 

- 40+ accredited lenders

- Extended until 31 March 2021

What is the CBILS loan scheme?

COVID-19 is having a significant impact on businesses across the UK. To help those who are experiencing cash flow disruption due to the pandemic, the Government has introduced a series of financial support measures and business loans. One of these measures is The Coronavirus Business Interruption Loan Scheme (CBILS). 

The scheme’s features and eligibility criteria have been expanded since it launched in March 2020 to enable a wider range of businesses to access help. This means more SMEs across the UK can access the funding they need to get through these challenging times. 

Crucially, the scheme has been opened up to companies that would’ve been able to get another commercial facility but wouldn't have been eligible for CBILS, as you no longer have to have insufficient security to be able to access a CBILS loan. 

On 17 December 2020, the Government announced that the CBILS will be extended until 31 March 2021. You can search for a CBILS loan - and other forms of business finance - through the Funding Options platform. 

Funding Options has been chosen by the government-owned British Business Bank (BBB) as a designated platform to find finance for businesses.

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What types of loans are available under the CBILS?

Up to £5 million is available through accredited CBILS lenders. CBILS loans can come in the form of:

  • Term loans - a loan that is repaid in regular payments over a set period of time. 

  • Overdrafts - a line of credit that can boost short term cash flow.

  • Invoice finance - borrowing money based on what your customers owe.

  • Asset finance - used to spread the cost of new business purchases.

CBILS term loans and asset finance facilities were initially available for up to six years and overdrafts and invoice finance were available for up to three years. However in September 2020, Chancellor Rishi Sunak said: “...I will extend the government guarantee on these loans for up to 10 years, making it easier for lenders to give more people more time to repay.” 

How does the CBILS work?

CBILS loans come with a government-backed guarantee. Under the scheme, the Government makes a Business Interruption Payment to cover the first 12 months of interest payments, as well as any lender-levied charges. This is to encourage more lending.

As with any loan, the borrower is 100% liable for the debt. For facilities under £250,000, no personal guarantee will be required. Facilities above the £250,000 threshold may require a guarantee (this is at the lender’s discretion). 

If the lender does ask for a personal guarantee for £250,000+ facilities, recoveries are capped at 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. Also, a Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility.

Who are the CBILS lenders?

British Business Bank operates CBILS through its 100+ accredited lenders. Lenders, some of which Funding Options’ is partnered with, include high-street banks, challenger banks, asset-based lenders and smaller specialist local lenders. Accreditation is still taking place, enabling more lenders to get on board with the scheme.  

Businesses and intermediaries should only apply for a CBILS-backed facility through an accredited lender or partner. Funding Options has processed over £240M in CBILS loans for its customers so far. You can use our platform to compare and choose the right loan for you.

Who is eligible for a CBILS loan?

As with all types of business finance, lenders will confirm your eligibility against a set of criteria before they can approve a CBILS-backed loan. To start, your business must be UK-based in its activity and have an annual turnover that doesn’t exceed £45 million. 

You’ll also need to show a borrowing proposal which the lender would consider viable, were it not for COVID-19. You’ll have to self-certify that your business has been negatively impacted by the pandemic. If you’re applying to borrow £30,000 or more, you must not have been classed as a business in difficulty.

So, what will lenders ask for?

To see if CBILS finance is both suitable and affordable for your business, lenders will ask for details of the loan, including:

  • How much you’d like to borrow

  • The business purpose you need the finance for

  • The period of time over which you’ll make the repayments

Supporting documents

You’ll also need to have some supporting documents to hand when you make a CBILS application. Although these will vary according to the lender’s individual requirements, it’s likely that you’ll be asked to provide the following:

  • Management accounts

  • A business plan

  • Historic accounts

  • Details of assets

Regardless, you still might be able to get a CBILS loan even if you don’t have all the documentation listed above. A lot of businesses seeking a CBILS-backed loan from their existing lenders go through an automated approval process which often doesn’t require the applicant to provide the same level of documentation.

Can a CBILS loan be used to refinance an existing commercial facility?

Depending on the circumstances, you may be able to use a CBILS loan for the purpose of refinancing existing debt. In principle, you may be able to access the CBILS if you want to put your business on a more stable financial footing and/or improve your working capital position. You’d still have to meet the eligibility criteria for the Scheme.

According to the BBB website, “Refinancing can be undertaken with or without an increase in the original borrowing. Any refinancing will be treated as a new facility and the application will need to meet the eligibility criteria for a CBILS facility.”

What if I’m not eligible for the CBILS loan scheme?

 The CBILS is just one of a number of financial packages announced by the UK Government. You can find details of other measures, including support for self-employed people, via gov.co.uk. For companies with an annual turnover in excess of £45 million, there’s the Coronavirus Large Business Interruption Loan Scheme (CLBILS).  

The Bounce Back Loan Scheme (BBLS) is another option. 

 This scheme is designed to help small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. As with the CBILS, the government guarantees 100% of the loan, there won’t be any fees or interest to pay for the first 12 months and the scheme is open to applications until 31 March 2021. After 12 months the interest rate is 2.5% a year.

Financial support for your business during COVID

Our Finance Specialists are here for you during COVID. To see what funding you could be eligible for, including CBILS loans and other types of finance like bridging loans, request a quote today. Just tell us what you need and what it’s for and our algorithm will compare up to 120+ lenders, before matching you with the right finance options for your needs. 

 Your quote won’t affect your credit score.