COVID-19

COVID-19 interruption scheme: accessing funding

COVID-19: Business Interruption Loan Scheme

Small businesses are the lifeblood of the UK and rightly one of the first areas of the economy the Chancellor moved to protect when launching the government’s £350 billion relief efforts in response to Coronavirus. 

In these turbulent times, access to government-backed funding will prove critical for many businesses plotting a course through fast-changing seas for the next 12 weeks and beyond.  

The details of the Coronavirus Business Interruption Loan Scheme (CBILS) are now available from British Business Bank and open to applications through the approved lenders. A list of the approved lenders is shown below this article indicating those which are regionally focussed.

CBILS Headlines

The scheme allows lenders to provide facilities of up to £5 million for up to six years, for term loans and asset finance, and up to three years for overdrafts and invoice finance.

It is important to note that as the scheme provides a guarantee to the lender the business will be liable for the full amount of the loan. The government guarantee will step in if the business subsequently fails and is unable to repay the loan. This therefore allows lenders to provide funding where they would normally require security from the assets of the borrower.

Eligibility

Any UK-based business with turnover less than £45 million will be able to access the Scheme through a participating scheme lender. If your existing funder is not part of the Scheme, speak to your clearing bank or one of the other specialist providers. Each lender will have its own lending limits and therefore you may need to make a few calls to explore this.

You must be able to demonstrate that, were it not for the COVID-19 pandemic, your business would be considered viable by the lender. The lender must also believe that the provision of this funding will enable your business to trade out of any short- to medium-term difficulty.

The scheme is open to those businesses that would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. Insufficient security is not a condition to access the scheme.

Costs and repayment

The arrangement fees, interest and any other fees are covered by the government for the first 12 months. You may need to make capital repayments on term loans or asset finance. However, we would expect that short to medium-term capital repayment holidays will be available.

Security

For any loans over £250k, the funder will require security (usually by way of a debenture or floating charge) over your business’ assets. Personal guarantees may still be required, at a lender’s discretion, for such facilities, 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.

Lending requirements

Key things to have in place when speaking to your lender are:

  1. The last two financial years accounts and year to date management accounts
  2. Short term weekly cashflow forecast (13-weeks) including aged creditors and debtors
  3. Current year forecast outturn and two years of financial forecasts (the challenge to forecasting at this time will be understood by lenders and should reflect your best assessment of the impact on the business)
  4. Details of how the business has been affected by COVID-19 and managements plan to trade out of the situation
  5. If personal guarantees are required completion of an assets and liability statement by relevant directors or shareholders
  6. The steps the shareholders have taken to exhaust all other options to support the business (including equity injections)

Please see above our download, a full checklist of information to be reviewed and available to support COVID-19 lending applications.

We are on hand to support businesses through the ongoing challenges of COVID-19. If you have any questions about accessing or applying to the scheme, please do not hesitate to contact us.

Larger Business Interruption Loan Scheme

Access to funding support by many of the UK’s larger mid-market businesses is likely to represent welcome relief another significant component of the UK economy. The recently announced Coronavirus Larger Business Interruption Loan Scheme (CLBILS) represents a significant extension of the original CBILS scheme that will provide potential access to liquidity for almost 10,000 UK businesses. The CLBILS scheme will allow participating lenders to provide facilities to eligible borrowers of up to £25 million.

Loans backed by the Government’s 80% guarantee will be offered at commercial interest rates. Any UK-based business with turnover between £45 million and £500 million will eligible to access the Scheme through a participating lender.

Further details regarding pricing arrangements and operation of the scheme will be released in due course.

National

Clearing banks
Specialist/asset based lenders
BarclaysABN AMRO Commercial Finance
HSBCArkle Finance Limited (AFL)
Lloyds BankAsk Inclusive Finance (AskIf)
Metro BankCalverton Finance
NatwestCompass Business Finance
SantanderCounty Finance Group Ltd
RBSGenesis Asset Finance
TSBHaydock Finance
Virgin Money/CYBGHitachi Capital Business Finance
Newable
Secure Trust Bank
Skipton Business Finance
UKSE

Regional

First EnterpriseEast Midlands
Enterprise Answers (Cumbria)North West
GC Business FinanceNorth West
Merseyside Special Investment Fund (MSIF)North West
Bank of Ireland (NI)Northern Ireland
Danske Bank (Nothern Ireland)Northern Ireland
Ulster Bank (Northern Ireland)Northern Ireland
Bank of ScotlandScotland
DSL Business FinanceScotland
Let’s Do Business GroupSouth East
South West Investment Group (SWIG)South West
Robert Owen Community BankingWales
ART Business LoansWest Midlands
BCRS Business LoansWest Midlands
Coventry & Warwickshire Reinvestment TrustWest Midlands
Business Enterprise FundYorkshire & Humber
Chamber Acorn Fund (Humber)Yorkshire & Humber
Finance for EnterprisesYorkshire & Humber

 

 

Related team

Tom Cox

Tom Cox

  • Partner
  • Debt Advisory
  • London