Coronavirus Business Interruption Loan Scheme – update

24 Mar Coronavirus Business Interruption Loan Scheme – update

Following on from Tom Wilkinson’s previous post, the full details of the Coronavirus Business Interruption Loan Scheme have been released by the British Business Bank, however, the application processes involved are currently being rolled out across the 40+ lenders who can access the scheme. These are expected to go live throughout the week and we are supporting businesses to get ready to apply so that they are amongst the first to take forward a formal application given that we are expecting a large number of initial applications for this scheme.

Coronavirus Business Interruption Loan Scheme (CBILS) features:

The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

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.

80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.

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.

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.

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% liable for the debt.

This post was written by Team Leek advocate Tom Wilkinson, Director of Beta Commercial Finance Limited.  For further information or understand what cashflow support is available the Beta Commercial Finance Limited team can be contacted on 01538 702565 or email [email protected].