What is the Coronavirus Business Interruption Loan Scheme?
The Coronavirus Business Interruption Loan Scheme (CBILS), delivered through British Business Bank accredited lenders and partners, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
It supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. Please note that for term loans and overdrafts, the minimum amount a lender can offer under CBILS is £50,001.
How does CBILS work?
If your otherwise viable business has been adversely impacted by the COVID-19 pandemic and the provision of finance will enable you to trade out of any short-to-medium term difficulties, we may be able to provide you with additional lending that you would otherwise not have access to using our suite of asset finance products.
The facility is underwritten, approved and managed by Close Brothers, and repayments are paid directly to us, just like any other business loan. We offer CBILS facilities of up to £5m over a maximum term of six years.
The guarantee is to Close Brothers ("the lender"), and not the small business. As with any other commercial transaction, the borrower is responsible for repayment of the full value of any facility supported by CBILS.
How can businesses access CBILS through Close Brothers?
If they are an existing Close Brothers Business Finance customer or are a new customer with a need for a CBILS-backed asset finance facility, please contact your Broker Development Manager.
Please note that if your business is ineligible for CBILS but we are able to offer finance on normal commercial terms without the need to make use of the scheme, we will recommend this.
Is my business eligible?
To be eligible for support via a CBILS facility, a business must:
1. Be a viable UK based business, with a turnover of no more than £45m per annum
2. Generate more than 50% of its turnover from trading activity
3. Require a CBILS-backed facility to support primarily trading in the UK
4. Borrow up to a maximum of £5m (finance terms are up to six years for term loans and asset finance)
Click here to read the full British Business Bank CBILS SME Checklist
Please note: The following are not eligible under CBILS:
- Banks, Insurers and Reinsurers (but not insurance brokers);
- public sector bodies and;
- state funded primary and secondary schools.
Key scheme features
- Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years.
- No guarantee fee for SMEs to access the scheme: No fee for smaller businesses.
- 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*, so smaller businesses will benefit from no upfront costs and lower initial repayments**.
- 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.
- Guarantee to the lender: The scheme provides the lender with a government-backed, guarantee against the outstanding facility balance. The borrower always remains 100% liable for the debt.
- Principal Private Residence (PPR) – A borrowers/guarantors PPR cannot be taken as security to support a Personal Guarantee or as security for a CBILS backed facility.
- The borrower always remains 100% liable for the debt.
Additional notes on security:
- No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
- Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
- Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment***.
*Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM Government greatly appreciates this approach by lenders.
**Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.
***Please note that where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility
Contact us today
If you have any questions about CBILS, please give a member of the team a call
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Managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. It is not authorised or regulated by the PRA or the FCA. Visit british-business-bank.co.uk