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Coronavirus Business Interruption Loan Scheme: an overview for SMEs

The Government has announced the Coronavirus Business Interruption Loan Scheme, CBILS, will make loans available to qualifying businesses across the UK who are experiencing a loss in revenue as a result of coronavirus.

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Published 24 March 2020

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Key information

  • Sectors
  • Financial services

CBILS is now available through participating lenders and will initially run for six months.

Types of finance

The types of finance available will depend on the lender but will include:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

Key aspects of CBILS

  • This is a loan and you will still be liable for 100% of the debt.
  • A Business Interruption Payment will 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.
  • The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years. For overdrafts and invoice finance facilities, terms will be up to three years.
  • Loans in the scheme are limited to a maximum of 25% of 2019 turnover or double the annual wage bill, whichever is greater.
  • High Street Banks are likely only to offer this facility to existing clients.
  • The lender may permit the scheme 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 using CBILS.

Which businesses are eligible?

Businesses are eligible for CBILS if they are:

  • UK based in its business activity;
  • have an annual turnover of no more than £45 million;
  • operate within an eligible industry sector
  • generate more than 50% of its turnover from trading activity:
  • were it not for the Coronavirus crisis, their loan request would be considered viable by the lender, and the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
  • are sole traders and freelancers, provided business activity is operated through a business bank account.

It is worth remembering that however favourable the terms these are still loans, and they do need to be repaid. It is therefore prudent to discuss options with our Corporate recovery & restructuring team prior to taking action.

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Shorter Reads

Coronavirus Business Interruption Loan Scheme: an overview for SMEs

The Government has announced the Coronavirus Business Interruption Loan Scheme, CBILS, will make loans available to qualifying businesses across the UK who are experiencing a loss in revenue as a result of coronavirus.

Published 24 March 2020

Associated sectors / services

  • Corporate recovery, restructuring & insolvency
  • Financial services

Authors

CBILS is now available through participating lenders and will initially run for six months.

Types of finance

The types of finance available will depend on the lender but will include:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

Key aspects of CBILS

  • This is a loan and you will still be liable for 100% of the debt.
  • A Business Interruption Payment will 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.
  • The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years. For overdrafts and invoice finance facilities, terms will be up to three years.
  • Loans in the scheme are limited to a maximum of 25% of 2019 turnover or double the annual wage bill, whichever is greater.
  • High Street Banks are likely only to offer this facility to existing clients.
  • The lender may permit the scheme 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 using CBILS.

Which businesses are eligible?

Businesses are eligible for CBILS if they are:

  • UK based in its business activity;
  • have an annual turnover of no more than £45 million;
  • operate within an eligible industry sector
  • generate more than 50% of its turnover from trading activity:
  • were it not for the Coronavirus crisis, their loan request would be considered viable by the lender, and the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
  • are sole traders and freelancers, provided business activity is operated through a business bank account.

It is worth remembering that however favourable the terms these are still loans, and they do need to be repaid. It is therefore prudent to discuss options with our Corporate recovery & restructuring team prior to taking action.

Associated sectors / services

  • Corporate recovery, restructuring & insolvency
  • Financial services

Authors

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