Coronavirus Business Interruption Loan Scheme launches to support SMEs

CBILS is a new scheme, announced in this year's Budget, that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance. The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. The borrower always remains 100% liable for the debt.

The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.

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.

Smaller businesses from all sectors can apply for the full amount of the facility.

To be eligible for a facility under CBILS, an SME must be UK-based in its business activity, with annual turnover of no more than £45m.

It must also have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

Stephen Jones, CEO of UK Finance, said: “The banking and finance sector is committed and has the capacity to support viable businesses with their cashflow and investment needs. The CBIL scheme is an important additional solution to the support banks and finance providers who are already providing help to support SMEs through the cashflow pressures they may increasingly experience during this unprecedented period.

“Lenders who are accredited to offer finance under the scheme are moving as quickly as possible to provide this support which will be available through customers’ usual contacts. Many lenders have online channels which customers can use to access the scheme. Businesses don’t need to worry about the support running out as this will be available on an on-going basis for those eligible businesses that need it.

“To help their customers, firms are constantly keeping their websites updated with the latest information, which can answer many customer queries. For more detailed questions there are a range of different ways to get in touch, including through online chat, social media and mobile and banking apps. As you will appreciate phone lines are very busy at this time and we would encourage only those customers who are facing an immediate issue with their finances to call their provider in the first instance.”