09 Nov Government-backed Coronavirus Business Interruption Loan Scheme (CBILS)

COVID19 9 November 2020

We hope you and your family are keeping well!

So with the new lockdown in place, you are probably aware, the government has announced further support for businesses, including extending the Coronavirus Business Interruption Loan Scheme (“CBILs”) to 31 January 2021, in order to help small businesses get through the difficulties created by the Pandemic. I thought you might like to know that we have already helped a number of our clients to successfully complete their CBILs applications and achieve their required borrowing. If this is something you are considering in order to sustain your own business over the coming months, we are here to help you prepare for your application, should you need our support.

What is a CBIL Loan

This is a government-backed scheme that helps small and medium-sized businesses to access loans and other kinds of finance (including invoice financing) up to £5 million. The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months. Loans can be taken over a maximum term of 6 years and there are no repayments, charges or fees due for the first 12 months. Insufficient security is no longer a condition to access the scheme, which means many more businesses can access the scheme.

Eligibility

You can apply for a loan if your business:

• is based in the UK
• has a minimum of 3 years trading history
• has an annual turnover of up to £45 million

You need to show that your business:

• would be viable were it not for the pandemic
• has been adversely impacted by the coronavirus

How long the loan is for

The maximum length of the facility depends on the type of finance you apply for and will be:

• Up to 3 years for overdrafts and invoice finance facilities
• Up to 6 years, for loans and asset finance facilities

Security requirements

The borrower remains fully liable for the debt. Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000. For facilities above £250,000, 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 CBILS-backed facility

What you need

You’ll need to provide documents (which vary from lender to lender) that show you can afford to repay the loan.

These may include:

• management accounts
• cash flow forecast
• business plan
• historic accounts
• details of assets

The lender will check that the loan is:

• for a suitable business purpose
• affordable for you
• the right type of finance for your needs

The lender will then decide whether to offer you a loan or another type of finance and you’ll be responsible for repaying 100% of the amount borrowed. That’s is why it is so important to get the right information to the lender in a timely manner.

How can we help you

As I mentioned earlier, we have helped a number of our clients that require funding during these difficult times. We can prepare an initial assessment as to the viability of a loan application. After an initial assessment, we will be able to confirm with a degree of certainty about the chances of success in securing the funding. We will also assist in preparing the financial information and documents you will need for your application and any other information required. If you would like some help in this area, please contact us.