Coronavirus Business Interruption Loan Scheme (CBILS)
This scheme helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million. The Government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months.
The maximum length of the facility depends on the type of finance you apply for and will be:
- up to 3 years for overdrafts and invoice finance facilities
- up to 6 years, for loans and asset finance facilities
To maximise the support available, the Chancellor extended the CBILS on 2nd April so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, would now be eligible.
To apply, your business must:
- be based in the UK;
- have an annual turnover of up to £45 million.
You need to show that your business:
- would be viable were it not for the pandemic;
- has been adversely impacted by the Coronavirus.
If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides financial support to mid-sized and larger UK businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.
Specifically, it facilitates access to finance for businesses with a turnover above £45 million (up to £500 million), the upper limit for the existing smaller-business focused Coronavirus Business Interruption Loan Scheme (CBILS).
The scheme will provide a Government guarantee of 80%, giving banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS.
As at 19th May, businesses will be able to benefit from larger loans under this scheme with the maximum loan size available being increased from £50 million to £200 million to help ensure those large firms which do not qualify for the Bank of England’s Covid Corporate Financing Facility (CCFF) have enough finance to meet cashflow needs during the outbreak.
A business can therefore borrow up to 25% of turnover, up to a maximum of £200 million under this scheme.
The expanded loans, which were introduced by Government following discussions with lenders and business groups, will be available from 26 May.
It is important to note that companies borrowing more than £50 million through CLBILS will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan, including a ban on dividend payments and cash bonuses, except where they were previously agreed.
To be eligible, your business must:
- Be UK-based in its business activity;
- Have an annual turnover of more than £45 million;
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty;
- Self-certify that it has been adversely impacted by the coronavirus (COVID-19);
- Not have received a facility under the Bank of England’s COVID-19 Corporate Financing Facility (CCFF)
In making an application to either of these schemes, businesses should consider adopting BDO’s ‘5 Point Plan’ so as to fully communicate the business’s position and needs in a focused and transparent manner.