How do I apply for a Coronavirus Business Interruption Loan?
UPDATED: The Coronavirus Business Interruption Loan Scheme (CBILS) has been extended to the end of March 2021.
It was last extended until January 31 2021 but the deadline was pushed back to help businesses recover in the new year.
On July 30, the Coronavirus Business Interruption Loan Scheme has been relaxed to make more SMEs eligible for emergency funding.
Until then, an SME that was classed as an ‘undertaking in difficulty’ was barred from getting access to the loan unless the business was less than three years old. They’d be an undertaking in difficulty if, by deducting accumulated losses from its reserves, it was left with a negative amount greater than half of its subscribed share capital, as of December 2019.
This changes mean that SMEs with fewer than 50 employees and a turnover of less than £9m will not be classed as an undertaking in difficulty, unless they’re subject to insolvency proceedings or receiving certain types of aid. It’s expected to help small businesses that have previously secured private equity and venture capital funding.
Allie Renison, head of Europe and trade policy at the Institute of Directors, said:
“This is a welcome move towards helping more British businesses access much-needed finance. The UID test has caused a lot of frustration, and the IoD has been knocking hard on the door of both government and Brussels to secure this change.
“The onus is now on lenders to heed this development and ensure support reaches where it needs to be. As companies look to reopen and restart operations, cash will be tight, so it can’t come soon enough. It’s crucial that Government provides sufficient clarity and guidance in its own criteria to lenders to ensure there are no further hold ups.”
The Coronavirus Business Interruption Loan scheme went live on Monday, March 23.
British Business Bank is delivering the loan scheme, which supports SMEs to access bank lending and overdrafts. Interest rates will be similar to current bank lending.
The government will provide lenders with a guarantee of 80 per cent of each loan – subject to a per-lender cap on the number of bad loans it can claim for.
And you don’t have to be disqualified from commercial lending in order to access the scheme.
How the Coronavirus Business Interruption Loan Scheme works
The scheme will support loans of up to £5m per small business. This new guarantee, which replaces the existing £500m Enterprise Finance Guarantee (EFG), will initially support up to £1.2bn of lending.
On March 27 chancellor Rishi Sunak announced that the CBILS had received 30,000 applications in just four days. Loan applications will take between four to six weeks to be approved, predicts SME finance broker Rangewell.
Announcing further updates to the CBILS on April 3, the chancellor banned all lenders from asking for personal guarantees for loans of under £250,000 – something which the high-street lenders had already publicly pledged to
More than 40 lenders including the big four banks — Barclays, HSBC, Lloyds and RBS — provide funds under the scheme as either loans, overdrafts or asset-based lending secured on equipment or invoices.
However, the Coronavirus Business Interruption Loan is meant to offer more attractive terms for both small business and lenders than the EFG. That said, some small businesses have complained about being charged interest of up to 35 per cent. The Federation of Small Businesses has called for any coronavirus emergency business loans to have their interest rate capped at 6 per cent.
- Finance terms will be from three months up to 10 years for term loans and asset finance and up to three years for revolving facilities and invoice finance
- Lenders will not charge small businesses or banks for this guarantee. And the government will waive the 2 per cent it charges borrowers annually for the EFG guarantee
- However, the small business borrower will always remain 100-per-cent liable for the debt
Coronavirus Business Interruption Loan key features
- Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years. Registered companies can borrow anything between £10,000 and £5m, while sole traders and partnerships and borrow anything between £25,001 and £5m
- Bigger companies: with turnover of between £45m-£500m can borrow up to £25m
- 80 per cent guarantee: The scheme provides the lender with a government-backed, partial guarantee (80 per cent) against the outstanding facility balance, subject to an overall cap per lender
- No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k
- Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but 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. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility
- Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment
- No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme
- Interest and fees paid by government for 12 months: The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments. After 12 months, the interest rate will be variable interest rate with option to fix
- Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years
- Variable interest rate with option to fix after the initial interest free period
- Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so
- The borrower always remains 100 per cent liable for the debt
Is your small business eligible for a Coronavirus Business Interruption Loan?
Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, a smaller business must:
- Be UK based in its business activity, with turnover of no more than £45m per year
- Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.
- Self-certify that it has been adversely impacted by the Coronavirus (COVID-19
Lenders offering Coronavirus Business Interruption Loans
- Adam & Company
- Allied Irish Banks
- Arkle Finance Limited
- ART Business Loans
- Asset Finance Partners
- Assetz Capital
- Atom Bank
- Bank of India
- Bank of Ireland
- Bank Leumi
- Bank of Scotland
- Bibby Financial Services
- Business Enterprise Fund
- Capital On Tap
- Calverton Finance
- Chamber Acorn Fund
- Close Brothers
- Clydesdale Bank
- Compass Business Finance
- County Finance Group
- Cynergy Bank
- Dankse Bank
- DSL Business Finance
- Enterprise Answers
- Finance for Enterprise
- First Enterprise
- Funding Circle
- FW Capital
- GC Business Finance
- Growth Funding
- Haydock Finance
- Hitachi Capital UK
- Independent Growth Finance
- JCB Finance
- Let’s Do Business
- Lloyds Bank
- Maven Capital Partners
- Merchant Money
- Mercia Asset Management PLC
- Metro Bank
- NEL Fund Managers
- Nucleus Commercial Finance
- OakNorth Bank
- Paragon Bank
- Robert Owen
- Scania Financial Services
- Secure Trust
- Shawbrook Bank
- Skipton Business Finance
- Social Investment Business
- Starling Bank
- SWIG Finance
- The Co-operative Bank
- The FSE Group
- Tower Leasing
- Triodos Bank
- Triple Point
- Ulster Bank
- Ulster Community Investment Trust (UCIT)
- Ultimate Bank
- United Trust Bank
- White Oak UK
- Whiterock Finance
- Woodsford TradeBridge
How to apply for a Coronavirus Business Interruption Loan
In the first instance, businesses should approach their own provider – ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.
Compare business loans from across the market with our partners, Know Your Money.
Your CBIL loan could be combined with other forms of funding, such as crowdfunding platforms and other lenders. Small Business has teamed up with FundingOptions.com to help you find the right finance for your business. You can find their page here.
How long will it take for my loan to come through?
Loan applications will take between four to six weeks to be approved, predicts SME finance broker Rangewell.
However, high street banks have blamed the British Business Bank for the month-long plus delays, preventing thousands of small businesses from accessing urgently needed funds.
Under the terms of the CBILS launched two weeks ago, banks make their own decisions about which customers to lend to, but have to book those loans with the British Business Bank. And banks have to follow the BBB’s rules if they are to reclaim the Treasury’s 80 per cent guarantee through the scheme.
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This page will be continually updated as more information from British Business Bank becomes available.