The Coronavirus Business Interruption Loan Scheme (CBILS) was launched in March to help businesses mitigate the impact of the pandemic. Over the last few weeks, the scheme has become available to a wider range of businesses. Read on to find out more about the CBILS, including what to prepare for your application and what to do if you’re rejected.
What is the CBILS?
The CBILS provides financial support to SMEs impacted by COVID-19. The UK Government makes a payment to cover the first 12 months of interest payments and any lender levied charges to encourage more lending and make it more affordable. There are no fees to pay for the borrower or lender.
The borrower remains 100% liable for the facility.
The scheme, which is one of a package of measures outlined by the Government, is delivered through 40+ British Business Bank accredited lenders who can provide up to £5 million to smaller businesses experiencing cash flow problems due to lost/ deferred revenue.
If you’re a larger business in need of funding, check out the Coronavirus Large Business Interruption Loans Scheme (CLBILS).
Recently, the CBILS, its features and eligibility criteria were expanded to enable more businesses to access the funding they need throughout these challenging times.
Most notably, the loan scheme is now available to SMEs that would’ve previously met the requirements for a commercial loan but not CBILS. Also, insufficient security has been removed from the scheme’s list of conditions.
How it works
As mentioned above, the CBILS is delivered through a range of accredited lenders, from household high street banks to smaller specialist local lenders. A lender can provide up to £5 million through the following facility types:
- Term loans
- Invoice finance
- Asset finance
Term loans and asset finance facilities are currently available on repayment terms of up to six years. Overdrafts and invoice facilities, on the other hand, are available on repayment terms for up to three years.
When it comes to security, CBILS can support lending even where a lender considers there to be insufficient security, with no personal guarantees for facilities under £250,000.
According to the British Business Bank, “personal guarantees may still be required, at a lender’s discretion, for facilities above £250,000, but they exclude the Principal Private Residence (PPR) and 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.”
To be eligible for the scheme your business must be UK-based in its activity and have an annual turnover of £45 million or under. You’ll be required to put together a borrowing proposal the lender would consider viable were it not for the outbreak and you’ll have to self-certify that your business has been negatively impacted by the pandemic.
If you want to apply for £30,000 or more, you must not have been classed as a “business in difficulty” on 31st December 2019. Facilities under £30,000 can’t be used for specific activities outside of the UK. Alongside these stipulations, lenders will require further information in order to make a decision as to whether or not you’re eligible.
Businesses from any sector can apply, aside from banks, insurers and reinsurers (but not insurance brokers), public-sector bodies and state-funded primary and secondary schools.
How to apply
The first step is to find a lender.
You can visit the lender’s website to access information on how much they can offer and in what form, e.g. term loan. Keep in mind that phone lines are likely to be busy.
You can also apply for the CBILS using the Funding Options platform. We can help you package your application in a way gives you the best chance of getting an approval. Fill in our short form to get started. Once we've received it, a Finance Specialist will match you with a CBILS lender based on your needs and circumstances.
The following checklist is designed as a general guide and doesn’t confirm your eligibility. The lender will require further information before they make a decision. One of the main reasons companies get rejected for a CBILS facility is because they don’t present their case in the right way, so be sure to go through the application process thoroughly.
- Sole trader, partnership, a company or an individual acting on behalf of a company ☐
- A UK-based business ☐
- A business (or group of businesses) with a turnover of no more than £45 million ☐
- A business that generates over half its turnover from trading or commercial activity in the UK ☐
- A business that was NOT considered as a “business in difficulty” as at 31 December 2019 if applying for £30,000+ ☐
- NOT a bank, an insurer or a reinsurer, public-sector organisation, state-funded primary or secondary school ☐
You’ll need to provide some documentation when you apply for a CBILS facility. This will vary according to the lender, but you may be asked for:
- Management accounts ☐
- Business plan ☐
- Historic accounts ☐
- Details of business assets ☐
What happens if my application is rejected?
If a lender turns you down, you can still approach another CBILS accredited lender. If you were turned down prior to the scheme’s modifications, you might want to consider getting back in contact with the lender(s) to see if you’re eligible now.
If you’ve been turned down for CBILS-backed facilities or have discovered that the scheme isn’t suitable, there are other funding options out there to choose from. Just because you aren’t eligible for a CBILS loan, doesn’t mean you won’t be eligible for other types of finance that could help you gain access to working capital.
There are lots of alternatives, some of which might be a better match for your requirements. For example, if you invoice businesses regularly, invoice finance might be a suitable option. Asset refinance – a type of lending that provides you with access to the assets you need to operate – is another such option.
The coronavirus Bounce Back Loan Scheme (BBLS) is designed to help businesses affected by the COVID-19 outbreak access finance faster. Eligible SMEs can borrow a six-year term loan ranging from £2,000 to 25% of its annual turnover (the maximum amount available is £50,000).
Whatever your circumstances, you can use the Funding Options platform to search for types of funding you might be eligible for based on your needs. We’re continuing to work at full capacity throughout the coronavirus pandemic, so feel free to get in touch with our team.