The Coronavirus Business Interruption Loan Scheme (CBILS) is proving to be a lifeline for businesses across the UK. Initially designed for those who’ve lost revenue or experienced cash flow disruption due to Covid-19, the scheme can also be used by businesses to grow and develop too. CBILS is part of a broad package of government support for UK businesses and employees.

CBILS loans of up to £5m are available on repayment terms ranging from three to six years. Businesses with a turnover of up to £45m can apply, and £4.97 billion of finance has been approved since the scheme began in March 2020.

If you’re one of the 82,000 plus companies who’ve already received a CBILS loan, did you know that you could be eligible for a second facility?

Who can apply for a second CBILS loan?

To be eligible for a second CBILS loan, you’ll have to meet the same criteria as you did for the first. For instance, you’ll need to show that your business would be viable were it not for Covid-19 and that it’s been negatively impacted by the pandemic.

Applying for a second CBILS loan can provide your business with the cash flow boost it needs to mitigate ongoing financial challenges. Whether you’ve had to temporarily close due to the lockdown or are struggling to meet customer demand, applying for a second loan could be an option well worth looking into.

There are two key caveats to keep in mind:

• You’ll only be eligible for a second CBILS loan if you haven’t yet received a loan for the maximum amount available to you – this is 25 per cent of your annual turnover
• The value of your two CBILS loans combined can’t be more than 25 per cent of your business’ annual turnover

For example, if your first CBILS loan was for the equivalent of 10 per cent of your business’ annual turnover, you might be able to borrow a further 10 per cent. You can apply to any of the 117 accredited lenders participating in the scheme and don’t necessarily have to go with the same one as before.

Funding Options is partnered with over 40 lenders offering CBILS. To help speed up the process, our finance specialists can match you with an appropriate lender for your needs. The scheme ends on March 31 so if you’d like to apply for a second CBILS loan, now’s the time.

So, what are some of the benefits associated with CBILS loans?

#1 – No interest for first 12 months

CBILS-accredited lenders receive a government-backed, partial guarantee against the outstanding balance of the finance, meaning there is no interest to pay for 12 months.

There are also no arrangement/guarantee fees or redemption/early payment penalties.

Of course, as with any type of business loan, you’ll remain 100% liable for the debt.

When it comes to paying interest after the government-backed period has ended, rates will vary depending on the lender. A finance expert at Funding Options can help you compare rates to find the best for you.

#2 – No personal guarantees

Fortunately, insufficient security is no longer a condition to access the scheme.

Even if the lender considers you to have sufficient security, you could still be eligible for a facility. What’s more, there are no personal guarantees for loans under £250,000, so you don’t have to worry about personal assets such as your home being compromised.

Depending on the lender, personal guarantees could still be required for facilities above £250,000. However, this can’t include your Principal Private Residence (PPR). Recoveries are capped at a maximum of 20 per cent of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.

#3 – Freelancers can apply

It’s a misconception that only limited companies can apply for a first or second CBILS loan. As long as you fit the scheme/lender’s eligibility criteria and you generate over 50 per cent of your income from trading goods or services, you could be eligible. (Registered charities and further education organisations are exempt from this requirement.)

As well as limited companies, the scheme is open to:

• sole traders
• freelancers
• bodies corporate
• limited partnerships
• limited liability partnerships

#4 – You can choose from different loan types

CBILS lenders can provide up to £5m in the form of term loans, overdrafts, invoice finance and asset finance. The type of loan you apply for will depend on your business’ needs and circumstances.

Here’s an overview of each:

• Term loans – With a business term loan, the lender provides you with a sum of money that your company pays back in regular repayments at a fixed interest rate
• Overdrafts – An overdraft is a line of credit on your business’ bank account designed to help boost-short term cash flow or act as a financial “safety net”
• Invoice finance – This type of finance frees up cash flow: the lender advances you the value of your invoices for a fee so you don’t have to wait for payments
• Asset finance – Asset finance is a type of business finance that enables you to obtain assets – such as machinery or tech – by spreading the cost of purchase

Business finance to mitigate Brexit challenges

Of course, Covid-19 isn’t the only challenge businesses currently face.

Although the end of the Brexit transition period brought with it a degree of stability, many UK companies continue to grapple with uncertainties – particularly around travel and trading with EU markets. During this period of change, business owners may want to explore finance options that can reduce pressure and provide the financial headroom required.

Applying for business finance through Funding Options

You can apply for a second (or first) CBILS loan via the Funding Options platform.

Trusted by company directors across the UK, Funding Options has been selected by the government-owned British Business Bank as a designated platform to find finance for businesses. To get started, tell us how much finance you’d like to borrow, what it’s for and how quickly you need it. We’ll compare over 120 lenders to match you with the right finance options for your needs. It’s free and doesn’t affect your credit score.

Further reading

A guide to getting a business loan during Covid-19 

Looking for finance? SmallBusiness.co.uk is working in partnership with trusted lenders to help you find the best business funding deals. Find out more here.