Coronavirus: Business Interruption Loan Scheme (CBILS)
CBILS are due to be launched on Monday, 23 March and are being provided as part of a wide-ranging raft of measures to assist SMEs to deal with cashflow problems resulting from the global COVID-19 crisis. The CBILS loans will temporarily replace and therefore are largely expected to follow the framework of the existing Enterprise Finance Guarantee loan scheme (EFG). Under CBILS the lender benefits from a government-backed guarantee of 80% of the loan amount (it is worth noting that the borrower remains 100% liable for the debt). This guarantee is designed to expediate the credit approval of loans by accredited lenders so that cash can be made available to businesses in a timely manner.
In addition to loans, there are other funding products available through CBILS depending on the chosen provider including overdrafts, invoice finance and asset based lending.
We understand the maximum term loan amount available under the scheme will be £5 million. Repayment terms are from three months up to ten years for term loans and asset finance and up to three years for revolving credit and invoice finance facilities. There will also be an interest holiday for businesses of 6 months with the Government covering the interest payments during this period.
Broadly, to be eligible a business must:
- be UK based, with turnover of no more than £41 million per annum;
- operate within an eligible industrial sector (a small number of sectors are ineligible);
- have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years; and
- have a sound borrowing proposal, but insufficient security to meet the lender’s usual requirements.
The take up of the EFG loan scheme was fairly mixed with lenders often still required to undertake diligent credit approvals given their exposure to the lending, notwithstanding the significant Government guarantee. The details of the CBILs Scheme are eagerly awaited and need to be attractive for both lenders and borrowers to ensure that the loans can be implemented rapidly to head off the cashflow problems which many businesses are clearly going to face. In addition, the eligibility tests relating to “a sound borrowing proposal” will be key given the impact that the Covid-19 crisis will have on companies during the next few months.
The Finance team at Keebles have extensive experience of assisting borrowers and accredited lenders with the successful completion of loans provided under the EFG loan scheme.
Further information and details of CBILS accredited providers can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/.
If you would like to discuss how we can assist with CBILS, please contact Michael Hall at email@example.com or on 07583 016983 or James Burdekin at firstname.lastname@example.org or on 07525 930817.