Coronavirus emergency business support launched
Monday 23rd March saw the the government-backed Coronavirus Business Interruption Scheme (CBILS) open for applications. Smaller UK businesses can apply for facilities of up to £5 million through over 40 accredited lenders.
Keith Morgan, Chief Executive of the British Business Bank, said: “In this period of exceptional hardship for smaller businesses across the UK, it has been vitally important to get this new scheme up and running as soon as possible.
“Available from today, we hope this new scheme will enable lenders to provide the finance smaller UK businesses need, alongside other government measures, to help them survive the current economic disruption.”
Is your business eligible for CBILS funding?
If your business is struggling under the weight of the COVID-19 outbreak, you may be eligible to apply for funding of up to £5 million.
- The CBILS scheme is available to businesses that are UK-based in their activity with a turnover of less than £45m per year.
- You should have a proposal that would be considered viable had the virus not hit, and lenders must believe that the cash could help your business escape short-to-medium term troubles.
- Smaller businesses from all sectors can apply for the full amount of the facility, but there are some exceptions*.
- If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
How to apply
CBILS is available through 40+ accredited lenders and partners listed on the British Business Bank website. In the first instance, businesses should approach their own provider – ideally via the lender’s website.
They may also consider approaching other lenders if they are unable to access the finance they need. Businesses are encouraged to apply directly via the lender’s website, as telephone lines might be busy and branches may have limited capacity because of the outbreak.
The Chancellor of the Exchequer, Rishi Sunak, said: “We are working round the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”
Government-backed financial support available for businesses currently includes:
- Coronavirus Job Retention Scheme
- Cash Grants from Local Authorities
- Business Rates Holiday
- Covid Corporate Financing Facility (CFFF)
- SSP relief for SMEs
- Deferred VAT and income tax payment
This information is up-to-date as of 23rd March 2020, and will be updated in line with information released from HM Government as this becomes available.
What are the features of CBILS?
The Coronavirus Business Interruption Loan Scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.
The scheme provides the lender with a government-backed guarantee, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
- Up to a £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
- No guarantee fee for SMEs to access the scheme: This means no fees for smaller businesses. However, lenders will pay a fee to offer funding through the CBILS scheme**.
- Interest and fees paid by the Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender fees, so smaller businesses will benefit – no upfront costs and lower initial repayments.
- Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
- Security: The scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
- The borrower always remains 100% liable for the debt
You can find more information about managing cash in a time of uncertainty, including support for businesses affected by COVID-19, and by EU Exit, in new and updated information in the Business Finance Guide.
* The following trades and organisations are not eligible to apply for CBILS: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state-funded primary and secondary schools; Employer, professional, religious or political membership organisation or trade unions.
** Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.