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Coronavirus Business Interruption Loan Scheme (CBILS) – updated 03/04/2020

  • Coronavirus Business Interruption Loan Scheme (CBILS)

    This scheme is designed to give businesses easier access to funding and can provide loans up to £5m with Government guaranteeing 80% of any losses suffered by the lender. More importantly, the requirement to provide a personal guarantee for loans up to £250,000 has been removed. This makes the scheme much more attractive.

    Key points include:
    • Loans are limited to 25% of 2019 turnover or twice the annual wage bill (whichever is greater)
    • The borrower is responsible for the entire loan repayment (not the 20%)
    • No interest is payable over the initial 12 months
    • Over 40 lenders are involved each with different offerings so its important to compare
    • Finance options include loans, overdrafts, invoice finance and asset finance facilities.

    The key requirements to be eligible include:
    • The business must be viable if it were not for the current Covid-19 crisis
    • The business must be able to continue to trade in the long term
    • It will not support an already failing business

    What we can do to help

    As with any loan application, the lender will require a significant amount of financial information and to increase the chances of funding in a reasonable time scale all information should be submitted at the start of the application process. With exceptional demand expected by the banks, missing items will likely mean the application is pushed to the bottom of the pile!

    Typical information required will include:
    • Last 2 years accounts
    • Management accounts from the end of the last year-end to date
    • Cashflow forecast (at least 12 months)
    • Three years address history for all director/partners / applicants
    • Schedules of current finance and HP commitments (current balance, repayment commitments, end dates)
    • Up to date asset and liability list for all directors/partners

    A brief business plan which will cover the following issues:
    o Update in the performance of the business prior to the onset of coronavirus
    o A clear explanation of the impact of coronavirus on the business
    o A clear explanation on how the business will mitigate the impact and how the business will trade out of the current situation (funders will look to only lend to businesses that are viable).
    o List of any key assumptions/risks and how they will impact
    o Confirmation that you have taken advantage of other available schemes such as the Job Retention scheme, deferment of VAT and other taxes.