Businesses are the lifeblood of the UK and rightly one of the first areas of the economy the government moved to protect when launching the its relief efforts in response to Coronavirus.
In these turbulent times, access to government-backed funding has proven critical for many businesses and will continued to do so as they plot a course through fast-changing seas for the next 12 months and beyond.
The details of the Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus large Business Interruption Loan Scheme (CLBILS) are 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.
The deadline for completion and drawdown of funds under the CBIL and CLBIL scheme is 30 November 2020, subject to any further extensions.
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.
Any UK-based business with turnover less than £45 million is 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.
Borrowers must also demonstrate that they are not an “undertaking in difficulty” at the date of application under the scheme, being a business that:
For larger businesses with more complex capital structures it is possible to restructure or recalibrate the balance sheet before submitting an application in order to mitigate the undertaking in difficulty restrictions (at the date of application) in relation to the accumulated losses and share capital test.
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.
For any loans over £250,000, 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.
Key things to have in place when speaking to your lender are:
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.
The Coronavirus Larger Business Interruption Loan Scheme (CLBILS) provides potential access to liquidity for almost 10,000 UK businesses.
The CLBILS scheme allows participating lenders to provide facilities to eligible borrowers of up to £200 million backed by an 80% government guarantee at commercial interest rates. Any UK-based business with turnover between £45 million and £500 million is eligible to access the scheme through one of the 21 current participating lenders (Excludes subsidiary brands of the same ultimate lending institution).
Lending is available up to £200 million, capped at i) double the borrower’s annual wage bill or ii) 25% of the borrower’s total turnover for the last financial year. Term loans and revolving credit facilities over £50 million are offered by five CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance and asset finance facilities is £50 million.
Lending guidelines and data requirements are similar to the smaller CBILS scheme, with a need to demonstrate viability absent due to the current COVID-19 crisis and based on the borrower’s liquidity needs for the next 12 months.
The maximum term of CLBILS borrowing is three years and any repayment schedule will be agreed on an individual basis. There are no interest or fee holidays available under the CLBILS scheme.
Certain restrictions exist for facilities greater than £50 million including:
New lending is provided on a super senior or pari passu basis with other secured facilities currently in place with a borrower (noting specific carve-outs for certain security in relation to asset finance and invoice finance will however apply). The interaction of this security package will need to be discussed in detail with both your incumbent lender and the participating CLBIL provider.
The Bounce Back Loan Scheme (BBLS) was introduced on 4 May following significant lobbying and will support smaller businesses finding it difficult to access the CBILS loan scheme. BBLS provides fast tracked lending to help small and medium-sized (SME) businesses seeking to borrow between £2,000 and £50,000. The government has guaranteed 100% of the loan and there are no fees or interest payable for the first 12 months. Loan terms will be provided with a tenor of up to six years, priced at 2.5% and with the government settling any interest payable during the first 12 months.
To be eligible for the BBLS three criteria will need to be met; i) the business is UK-based; ii) they can clearly demonstrate that coronavirus has negatively affected the business; and iii) the business was not classified as an undertaking in difficulty as of 31 December 2019.
Although the business must not have received a loan (of up to £50,000) under the CBILS scheme to be eligible, they may elect to transfer the facility into the BBLS. Arrangements with the existing lender can be made up until 4 November 2020.
|Barclays||ABN AMRO Commercial Finance|
|Lloyds Bank||Allied Irish Bank|
|Metro Bank||ART Business Loans|
|Natwest||Arkle Finance Limited (AFL)|
|Santander||Ask Inclusive Finance (AskIf)|
|TSB||Compass Business Finance|
|Virgin Money/CYBG||County Finance Group Ltd|
|Cynergy Bank||Genesis Asset Finance|
|Hitachi Capital Business Finance|
|Secure Trust Bank|
|Skipton Business Finance|
|First Enterprise||East Midlands|
|Business Enterprise Fund||North East|
|Enterprise Answers (Cumbria)||North West|
|GC Business Finance||North 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 Scotland||Scotland|
|DSL Business Finance||Scotland|
|Let’s Do Business Group||South East|
|South West Investment Group (SWIG)||South West|
|Robert Owen Community Banking||Wales|
|ART Business Loans||West Midlands|
|BCRS Business Loans||West Midlands|
|Coventry & Warwickshire Reinvestment Trust||West Midlands|
|Business Enterprise Fund||Yorkshire & Humber|
|Chamber Acorn Fund (Humber)||Yorkshire & Humber|
|Finance for Enterprises||Yorkshire & Humber|
|Bank of Scotland|
|Danske Bank (Northern Ireland)|
|Royal Bank of Scotland|
|Ulster Bank (Northern Ireland)|