Government releases details on Coronavirus Business Interruption Loan Scheme
24th March 2020
Following the announcement of the Coronavirus Business Interruption Loan Scheme (CBILS) on Friday last week, the Government has now released further details of the scheme, including who is eligible and how to apply.
Following the announcement of the Coronavirus Business Interruption Loan Scheme (CBILS) on Friday last week, the Government has now released further details of the scheme, including who is eligible and how to apply.
It is available to businesses with up to £45m turnover, with loans up to £5m which will be fee free and have 12 months interest free.
Scheme features
The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
- Up to £5m facility: the maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
- 80% guarantee: the scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
- No guarantee fee for SMEs to access the scheme: no fee for smaller businesses. Lenders will pay a fee to access the scheme.
- Interest and fees paid by government for 12 months: the government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees[1], so smaller businesses will benefit from no upfront costs and lower initial repayments.[2]
- Finance terms: finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
- Security: at the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
- The borrower always remains 100% liable for the debt.