Coronavirus Business Interruption Loan Scheme

The government has created a new Covid-19 Business Interruption Loan Scheme for loans of £50k to £5m - they will guarantee up to 80% on each loan so that lenders can provide more financing to struggling firms, plus the government will pay the first 12 months of interest and any lender fees on those loans. Businesses with turnover of up to £45m per year may be eligible.

Previously, only those small businesses which could not access financing on normal commercial terms could benefit. Going forward, all viable small businesses which have been affected by Covid-19 will now be eligible should they need finance to keep operating during this difficult time. The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals.

The full rules of the Scheme and the list of 40+ accredited lenders is available here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/.

There have been some recent updates to the scheme, the key points of which are:

  • As of 30th July all businesses with fewer than 50 employees and £9m in annual turnover will not be considered Undertakings in Difficulty. This is different to the Bounce Back Loan Scheme which requires small companies more than 3 years old to not have built up retained losses greater than half of their subscribed share capital.
  • The deadline for applications has now been extended to 30th November.
  • The Winter Economy Plan outlined the ability to be able to extend these loans to up to 10 years to assist with their affordability

Supported by our partnership with Capitalise (www.capitalise.com) we are able to help advise on and process your application for a business interruption loan or alternative finance (if a better option).

Lenders are asking for a great deal of information for these applications and you will need the following documents available in advance of any application:

  • Last 3 years full accounts with detailed P&L
  • Last 12 months business bank statements (Lloyds Bank usually need 6 months personal as well)
  • Up to date management accounts
  • Aged debtor and creditor lists
  • Confirmation of any outstanding debt (provider, term, repayment)
  • Statement of personal assets, liabilities, income and expenditure from all Directors
  • Home addresses of all directors/ shareholders

As well as prepared responses to the following questions:

  • What is the purpose of the requested facility (short term cash flow/longer term cash injection) and how will the funds be specifically used to address the shortfall caused due to COVID-19?
  • Please provide details on the amount of the borrowing request and how this amount has been derived. eg. How much are you requesting and why? Please explain how you have calculated the amount of the request, in what area of your business has the COVID 19 had its impact and how will the monies be used to help the business through this period of disruption. How do you feel the borrowing will support the longevity of the business?
  • On what basis has the amount been calculated? Has this been based on existing (pre virus) income and expenditure levels or future levels? If future, what assumptions are being used? Is it likely further borrowing at a later date will be required?
  • When the Pandemic is over, how long do you think it will take your business to recover? What challenges do you expect to see e.g. future loss of contracts/staff availability?
  • What changes are the business making in the short and longer term to help drive business performance back to either pre virus levels or beyond?
  • What was your Annual Sales Turnover for 2019?
  • What was your Annual Wage Bill for 2019?
  • Please provide the current number of Employees
  • What are the costs you currently have to pay in regards to running the business e.g. staffing costs, business premises costs, stock and or/other debt costs and what are you doing to reduce these?
  • Please provide us with a list of any other loan and finance commitments currently outstanding, including monthly amounts being made for each of these commitments
  • What have you been able to access in terms of government schemes in response to Covid-19 (Grants/rates non-payment/VAT deferral/Time to pay arrangements)? - please provide details
  • If you fill in the following questions, along with uploading all of the relevant documentation, we will be able to prioritise helping your clients accessing CBILS.

If you are looking at debt as an option to help navigate your way through this crisis then please book an appointment with Daniel Barnes, one of our Client Directors, in the first instance by clicking here.

Click here to go back to the Covid-19 support page.