A quick guide to Coronavirus Business Interruption Loan Scheme (CBILS)

Which businesses could be accepted for CBILS?

The key aim of CBILS is to help viable businesses survive a period of reduced trading due to the COVID-19 pandemic.

Businesses should note:

• CIBLS is only available for businesses which can demonstrate they were viable ahead of the pandemic and are now not viable as a direct result of the COVID-19 crisis.
• This could be a grey area for some businesses, particularly those who are start-ups with less than one year’s trading.
• Banks will look to use a ‘business-as-usual’ product in the  first instance and see whether they can offer from their own toolbox, rather than go straight to CBILS
• Businesses will be excluded if their maximum turnover exceeds £45 million.
• Borrowers remain 100% liable for the loan

Which businesses are eligible for CBILS?

UK businesses that have a turnover of less than £45 million and generate more than half of their turnover from trading may be eligible for CBILS funding.

Are there any exclusions

Banks, building societies, insurers and reinsurers, the public sector, state funded schools, trade unions and professional or employer based, religious as well as political membership organisations are excluded.

Are personal guarantees required?

For loans up to £250,000 the major banks have agreed that they will not seek personal guarantees. For loans greater than this amount, banks will seek the same security they would have asked for pre-crisis; this may include a personal guarantee. Banks are explicitly banned from taking a charge over a borrower’s primary residence.

Key points businesses need to keep in mind

• Not all banks are registered providers – some well- known institutions are only just making their applications.
• Banks won’t process the loans if the applicants were on their watch lists or consider them unviable or too risky.
• Applications for CBILS funding are not generally being processed on a first-come-first-served basis.
• Banks are already seeing sufficient volumes of applications and enquiries that they are operating a triage system instead, addressing those most in need first.
• If you are banked by a non-provider then it may be challenging to access this funding as banks are  primarily focused on supporting their own clients.
• CBILS is not for shoring up businesses that were already showing signs of stress and banks are mindful of affordability post-crisis.
• Businesses that face a delay to their application are likely to need interim help whilst their applications are processed during the hiatus period.
• In the main, banks are already being extremely  flexible. They are initiating their own measures (capital repayment holidays and covenant waivers, for example) before seeking to load up stressed businesses with more debt through CBILS.  
• Companies must, however, demonstrate a real need for the money, it’s not a free-for-all to load up the balance sheet – banks are wary of affordability post-crisis.
• Banks are generally requiring businesses to present a cash flow forecast demonstrating the need and, in some cases, a business plan. All applications will go through a credit process.
• Time is of the essence, speak with your bank or business adviser as soon as you can.
• The 80% government guarantee is for the benefit of the lender, not the borrower. It only kicks in once a lender has exercised all other possible recourse.

What should businesses do that don’t qualify for CBILS?

For critically affected businesses that don’t qualify for CBILS they may still apply for a business loan or commercial mortgage under the standard terms of the lender. Invoice finance to release cash flow quickly or asset finance for larger sums of money - again under standard terms.

How much can a business borrow using CBILS?

Businesses can borrow up to a maximum of £5 million.

Key features of CBILS

CBILS includes loans, asset finance, invoice finance and overdrafts. The key features for loans under the scheme are:

• Borrow up to £5 million
• Loan terms: up to six years
• The first 12 months of interest will be paid for by the government. Many banks are including a minimum six-month capital repayment holiday at the outset of the loan
• The government will provide security on behalf of the lender of up to 80% of the loan value
• This government security is available only where the bank can establish that security is not otherwise available

Is there a fee to use CBILS?

In addition to paying interest, all fees for the first 12 months are paid for by the government.  Therefore there are no arrangement fees or early resettlement fees due in the first year.
Loans may migrate onto standard loan terms after 12 months, which may include early resettlement fees, check with your lender.

Which lenders are in the scheme?

Loans
ABN-AMRO Commercial Finance ART Business Loans
Askif Inclusive Finance
Bank of Ireland UK
Bank of Scotland
Barclays
BCRS Business Loans
Business Enterprise Fund Calverton Finance
Business Finance
Chamber Acorn Fund (Humber) Clydesdale and Yorkshire Bank Compass Business Finance County Finance Group Limited CWRT
Danske Bank
DSL Business Finance Enterprise Answers
Finance for Enterprise
First Enterprise
Hitachi Capital (UK) PLC
HSBC
Let’s Do Business Group
Lloyds Bank
Metro Bank
Msif
NatWest
Newable
Robert Owen Community Banking Santander
Royal Bank of Scotland
Secure Trust Bank Commercial Finance Swig Finance
Ukse
Ulster Bank

Invoice Finance
ABN-AMRO Commercial Finance Calverton Finance
Secure Trust Bank Commercial Finance Skipton Business Finance

Asset Finance
Arkle Finance Limited
Compass Business Finance
County Finance Group
Genesis Asset Finance
Haydock Finance
Hitachi Capital (UK) Ltd

Overdrafts
Bank of Ireland UK 
Dankse Bank 
Santander Bank