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Coronavirus Business Interruption Loan Scheme (CBILS)

Coronavirus Business Interruption Loan Scheme (CBILS)

If you run a business in the United Kingdom that has been affected by the Covid-19 pandemic, you may be eligible for a Coronavirus Business Interruption Loan.

The CBILS scheme, introduced by the British Business Bank after the March 2020 budget announcement, has been created to help businesses facing temporary financial shortfalls as a result of the coronavirus crisis.

In this guide, we will be clarifying how the scheme works and which businesses may be eligible for support.

What is the Coronavirus Business Interruption Loan Scheme (CBILS)?

Enforced lockdown in the United Kingdom was deemed necessary to prevent the spread of Covid-19, though this has led to significant revenue losses, disruptions and delays for thousands of businesses.

The aim of the Coronavirus Business Interruption Loan scheme is to provide qualifying businesses affected by the pandemic with access to affordable loans of £50k to £250k, for which the government will pay all fees and interest for the first 12 months.

Approved lenders throughout the UK will be able to issue these Coronavirus Business Interruption Loans to qualifying business, many of which would normally fail to qualify under typical lending criteria. This relaxation of eligibility requirements and excellent repayment terms could provide thousands of UK businesses with a lifeline they need to ride the Covid-19 crisis intact.

It is however important to note at this stage that the terms and conditions of the scheme outlined by the government to date are considered temporary and are subject to change at any moment. Full details of the CBILS scheme can be found here.

Coronavirus Business Interruption Loan Scheme: Key Features

A basic summary of the key features of the Coronavirus Business Interruption Loan Scheme is as follows:

  • Fast-access loans of £50,000 to £250,000 available for qualifying businesses, with different lenders setting different maximum loan amounts within this threshold.
  • Flexible repayment terms of one year up to a maximum of five years, allowing repayments to be spread as preferred by the business.
  • No guarantee fees for smaller businesses to increase the affordability of the business interruption loans.
  • All interest and charges covered by the UK government for the first 12 months, eliminating upfront costs and fees from the equation.

If the loan is repaid within the first year, the borrower will be subject to no interest charges or borrowing costs whatsoever. The Coronavirus Business Interruption Loan scheme is effectively providing a free-of-charge cash advance system for qualifying businesses, whose revenues and cash flow have been affected by the coronavirus outbreak.

Eligibility Under the Coronavirus Business Interruption Loan Scheme

Each lender taking part in the Coronavirus Business Interruption Loan scheme will set its own limitations on how much any one business can apply for (from £50k up to a maximum of £250k).

All other criteria and eligibility requirements will remain fixed across all lenders as follows:

  • The business must be based in the UK with a maximum £45m annual turnover
  • All funds issued under the scheme are to be used for business purposes only
  • Not more than 50% of the company’s turnover must come from trading activity
  • The CBILS-backed loan must be used to support primarily trading in the UK
  • All funds will be repaid as agreed within the allotted 12 to 60-month period
  • The business must be in an otherwise strong and stable financial position

Importantly, the business must be able to demonstrate that during normal circumstances (if the Covid-19 crisis had not occurred) it would be in an otherwise amicable financial position. This is because the Coronavirus Business Interruption Loan scheme is exclusively aimed at those affected by the Covid-19 crisis directly, not businesses that were already struggling before the outbreak of the virus.

How UK Property Finance Can Help

As a leading independent broker, we can provide the objective support and advice you need to assess your suitability for a Coronavirus Business Interruption Loan.

Along with establishing your eligibility under the CBILS scheme, we can help you find your ideal provider from our extensive panel of specialist lenders across the UK. Even if your requirements are complex or urgent, you can count on UK Property Finance helping you find the best way forward for your business.

Call 0333 322 5544 anytime for an obligation-free consultation or email us on [email protected].

Last Updated: Aug 21, 2020 @ 3:33 pm
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