June 18, 2020

Coronavirus Business Interruption Loan Scheme (CBILS) FAQs

We’ve put together a list of FAQs to help you understand how the Coronavirus Business Interruption Loan Scheme (CBILS) works and how to apply. You can visit our COVID-19 content hub for more information on the financial support available and you can use our platform to find appropriate finance for your circumstances. 

cbils faqs 2

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What is the CBILS?

The Coronavirus Business interruption Loan Scheme is part of a set of measures introduced by the government to help SMEs affected by COVID-19 access financial support in the form of loans and other types of finance. 

 

How much can I borrow?

The scheme enables eligible businesses to access up to £5 million, with the government guaranteeing 80% of the finance to the lender. The government also covers interest/ fees for the first 12 months and there are no guarantee fees for SMEs.

 

Do lenders ask for security for the loan?

Under the CBILS, lenders won’t take personal guarantees for facilities under £250,000. For those above, personal guarantees might be required depending on the lender, excluding the Principal Private Residence (PPR). According to the British Business Bank, “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.”

 

Who is eligible for the CBILS?

You can apply if your business has been adversely affected by the coronavirus, is based in the UK and has an annual turnover of up to £45 million. Those looking to borrow £30,000 or more will have to confirm that their business wasn't deemed a business in difficulty on 31 December 2019. Businesses from all sectors can apply, aside from:

  • Banks/ insurers/ reinsurers
  • Public sector organisations
  • State-funded schools (primary & secondary)

 

Are SMEs based overseas eligible for the CBILS?

In principle, a foreign-owned SME is able to apply as long as it’s trading in the UK, not just selling into the UK. The core of its business operations must be in the UK and it must use the CBILS facility to support its business activity in the UK. The same goes for a UK-owned SME registered abroad.

 

How long is the loan for?

It depends on the type of finance you apply for. Invoice finance facilities and overdrafts are available;e for up to 3 years. Loans and asset finance facilities are available for up to 6 years. (Bear in mind that not all lenders will offer every type of finance.)

 

How can I apply for the CBILS?

You can apply for the CBILS through the Funding Options platform. We can help you package your application in a way that gives you the best chance of getting an approval. You can also visit the British Business Bank’s list of accredited CBILS lenders and approach them directly through their website. 

 

What information do I need to prepare for my CBILS application?

Requirements will vary from lender to lender. Depending on which you opt for, you could be asked to provide:

  • Last 12 months business bank statements and VAT returns
  • Up to date management accounts
  • Aged debtor and creditor lists
  • Details of debt currently held by the business
  • Details of assets
  • Home addresses of all directors & shareholders
  • Info on how Covid-19 has affected the business/ what the finance will be used for
  • Recovery plan & cash flow forecasts

 

What if I get turned down for CBILS finance?

You can always apply through other lenders in the scheme. Alternatively, you can apply for other kinds of finance. Funding Options has been chosen by the government-owned British Business Bank to help businesses find finance when they’re unsuccessful with the major banks. 

 

Are sole traders and freelancers eligible for the CBILS?

Yes, they can apply as long as their business activity is operated through a business account. The scheme is open to sole traders, freelancers, body corporates, limited partnerships, limited liability partnerships and other legal entities.

In principle, business, employer, professional, religious or political membership organisations or trade unions are also eligible.

 

Can I still apply for a CBILS facility if I’m receiving other aid?

You can still apply if you’re accessing other measures, however, certain payments might count towards the amount of Business Interruption Payment (BIP) you’re entitled to. BIPs are the payments the UK Government will make to cover interest and fees on your loan.

 

What support is available for larger businesses?

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) is available for large businesses affected by the coronavirus. Designed for companies with a turnover in excess of £45 million, eligible firms can access loans of up to £25 million. Large companies can also be entitled to the Bank of England’s COVID Corporate Financing Facility. A number of other measures are open to larger businesses, including the Coronavirus Job Retention Scheme.

If your question isn’t listed here, feel free to get in touch with a member of the Funding Options team for the latest information. Keep in mind that the CBILS is changing all the time and we’ll endeavour to make changes to our content as it evolves. 

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