The Coronavirus Business Interruption Loan Scheme ("CBILS") is a UK government-backed loan guarantee scheme to allow businesses negatively impacted by Covid-19 to borrow up to £5 million in value, for up to for 6 years. CBILS is one of a number of measures announced by the Government to help support people and business, more details can be found here.
The scheme was originally announced on 23 March 2020, although there was some criticism that it was not meeting the needs of businesses or fulfilling Government's intentions. After some considerable campaigning on behalf of small businesses, the British Business Bank has relaxed the rules for eligibility. Therefore additional changes were made to the scheme as of 6 April 2020 to allow more smaller businesses to benefit by accessing funding.
The CBILS is designed to provide additional finance to UK smaller businesses during the Covid-19 outbreak. Under the scheme, lending banks are provided with a guarantee for 80% of lending. This guarantee is between the Government and the bank, therefore the borrower is liable for 100% of the debt.
Registered companies can borrow between £10K and £5M whilst sole traders and partnerships can borrow anything between £25K and £5M. The Government is covering the first 12 months of interest payments and charges, with smaller businesses not paying additional fees to apply for the loan. This means smaller businesses will have lower initial repayments and not face any upfront costs to access funding.
The CBILS scheme was initially asking small business owners to offer up personal assets for security, and offering applicants to commercial rather than the Government guarantee backed products.
The CBILS scheme is now being expanded and will be available to viable businesses impacted by Covid-19, even if the lender would be prepared to offer the applicant a facility without the benefit of the CBILS scheme. This will mean more businesses are eligible to benefit, meaning reduced initial payments and fees.
The British Business Bank has confirmed that the lender can only require personal guarantees for facilities of £250,000 or more. However, where personal guarantees are required:
Smaller businesses can apply for the full amount of the facility providing:
Please review the quick eligibility checklist for SMEs here.
CBILS support a wide range of business finance facilities including:
Please note, not every lender can provide every type of finance listed. It is therefore important to check the lender's website as soon as possible to see what products they are accredited for. While lenders are committed to providing access to the scheme for businesses some lenders may take a few more days to ensure the scheme can be deployed through their channels.
Is the CBILS scheme a loan or a grant?
The scheme is not a grant. It provides a guarantee to a lender to allow them to provide finance, but businesses will still have to repay this loan or facility.
CBILS is available through the British Business Bank’s 40+ accredited lenders, which are listed on the British Business Bank website here
Initially businesses should approach their own provider – ideally via the lender’s website. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to social distancing. Businesses may also consider approaching other lenders if they are unable to access the finance they need.
Decision making on whether you are eligible for CBILS is fully delegated to the 40+ accredited CBILS lenders. These lenders range from high-street banks and challenger banks to asset-based lenders and smaller specialist local lenders.
Can I re-apply for CBILS if I qualified for commercial loan initally?
Yes, the British Business Bank is encouraging businesses to contact their lenders following the changes to the rules. If you have previously been turned down for a CBILS facility but qualified for a commercial loan, it would be worth while contacting your lender again.
These are the steps that you should take in applying for a loan:
You will need to provide certain evidence to show that you can afford to repay the loan. Typically this can include management accounts, cash flow forecasts, business plans, historic accounts and details of assets. The requirements will vary from lender to lender. This is why it's important to work alongside your trusted advisers to help guide you through the process.
Please contact us if you would like to discuss your options further or need help producing the the relevant documentation.
One off cash grants of £10,000 are available for eligible businesses that already pay little or no business rates due to Small Business Rate Relief (SBRR) and Rural Rate Relief (RRR). For retail, hospitality and leisure businesses with a rateable value between £15K to £51K, cash grants up to £25,000 are available. Businesses will need to contact their local authorities to ensure this is claimed.
The next quarterly VAT payments have been deferred, from March 2020 until June 2020. This is an automatic offer with no application required. Businesses will have until the end of the 2020-21 tax year to settle any liabilities accumulated in the current period.
Deferral of Self-Assessment Payment
The self-assessment payment on account, that is normally due to be paid by 31 July 2020 may now be deferred until January 2021. This is an automatic offer with no application required. This is great news for self-employed individuals with no penalties or interest charged for late payments.
Time to Pay
All businesses and self employed individuals in financial distress and with outstanding tax liabilities may be eligible to receive support with their tax affairs. These are agreed on a case by case basis and tailored to individual circumstances and liabilities. Please contact HMRC to discuss this further on 0800 0159 559.
Let's start the process
We hope you have enjoyed finding out about how to apply for a Coronavirus Business Interruption Loan and all the other options available to you and your business. There are many that are currently facing uncertainty and financial challenges at the moment. We are not just your average accountants - we pride ourselves on providing a personal touch and knowing what businesses and self-employed individuals are going through. It is our aim to ensure all those that need help and support will get it from our friendly team of experts.
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