The British Business Bank has launched the Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS) to help businesses through these unprecedented times.

Coronavirus Business Interruption Loan Scheme (CBILS)

All SMEs are eligible for this scheme, not just those businesses who can't secure finance through normal channels.

Lenders will receive an 80% guarantee on each loan (subject to a per-lender cap on claims) from the Government who will not charge businesses or banks for this guarantee.

The scheme supports loans of up to £5million in value and businesses can access the first 12 months of that finance interest free, as the government covers these payments.

CBILS loans have been extended over a period of 10 years. 

To be eligible for the loan, businesses must:

  • Be UK based in their business activity
  • Have an annual turnover of no more than £45 million per annum
  • Have a sound borrowing proposal, but insufficient security to meet the lender’s requirement
  • Lenders are not able to request personal guarantees for loans under £250,000
  • For loans over £250,000, personal guarantees can be sought for 20% of the loan ie the amount not guranteed by the Government

Businesses from any sector can apply except:

  • Banks, insurers and reinsurers
  • Public sector bodies
  • Further Education establishments if they are grant-funded
  • State-funded primary and secondary schools

Coronavirus Large Business Interruption Loan Scheme (CLBILS) 

If you're a larger business you can benefit from the CLBILS scheme which enables banks to loan up to £25 million to firms with an annual turnover of between £45 million and £500 million.

To be eligible for this scheme businesses must:

  • Be UK based in their business activity
  • Have an annual turnover of between £45 million and £500 million
  • Be unable to secure regular commercial financing
  • Have a borrowing proposal which the lender would consider viable were it not for COVID-19 or believes will enable you to trade out of any short-term to medium term difficulty
  • Businesses that were "undertakings in difficulty" on 31 December 2019 but are no longer "undertakings in difficulty" will now be (in principle) eligible for the schemes.

Business from any sector can apply except:

  • Banks and building societies
  • Insurers and reinsurers
  • Public sector organisations including state-funded primary and secondary schools.

To be eligible for these schemes, businesses previously had to demonstrate that they were not an "undertaking in difficulty", a requirement under EU State aid law as of 31st December 2019.

The definition of "undertaking of difficulty" includes businesses that:

  • Had accumulated losses greater than half of their subscribed share capital (for limited liability companies) or capital (for unlimited liability companies)
  • Had entered into collective insolvency proceedings or fulfilled the criteria to be put into collective insolvency proceedings
  • Had previously received rescue aid that was yet to be reimbursed or (in the case of a guarantee, terminated)
  • Had received restructuring aid and were still under a restructuring plan
  • Had (where the undertaking is not an SME) fallen below the required solvency ratios for the previous two years

The new guidance allows for the "undertaking in difficulty" assessment to be determined at the date of application for the schemes.  Businesses that were "undertakings in difficulty" on 31 December 2019 but are no longer "undertakings in difficulty" will now be (in principle) eligible for the schemes.

This flexibility means that businesses can take action to convert their debt (for example, in the form of loan notes) to shares (equity) in order to qualify for the schemes, giving them the option to restructure their finances before application so they may become eligible.

How to apply

Deadline - 31 March 2021. Apply here New

Take Action Now

To find out more about how Dains can support your business with an application for a Coronavirus Business Interruption Loan, please call 0845 555 8844 or simply complete our enquiry form.  Don’t wait, take advice now, we are here to help you.