Coronavirus Business Interruption Loan Guarantee Scheme

COVID 19 News and Updates – UK | Prager Metis | Mar 25, 2020

Coronavirus Business Interruption Loan Scheme (CBILS)

Summary of Government Support produced by Prager Metis LLP –Last updated 23 March 2020


What we know

The Coronavirus Business Interruption Loan Scheme (CBILS) is a loan guarantee scheme whereby the bank lends the business money with the Government providing the bank with an 80% guarantee.  This allows the bank to recover 80% of any loss from the Government.

CBILS supports a wide range of business finance products, including:

  • Overdrafts
  • Invoice finance facilities
  • Asset finance facilities
  • Term Loans

To be eligible for support via CBILS, the small business must:

  • Be UK based, with turnover of no more than £45 million per annum
  • Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations)
  • Be able to confirm that they have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
  • be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term

The Government will also cover the first 12 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital. The maximum value of a facility provided under the scheme will be £5 million.

The borrower is still responsible for making the repayments.

Borrowing under the CBILS has to be made via an accredited lender which includes some of the major banks e.g. HSBC, Barclays, Santander and Metro Bank.

On our initial review of the scheme, there are a couple of issues to take into account.  Whilst making the application is meant to be a quick process, every lender will have its own criteria and terms and this will require borrowers to search around for the best offers.  It is this searching around that will be a time consuming process.  It is important then to work with various advisors to ensure that a borrower is applying for the best deal available.

A Q&A released by the British Business Bank can be found in the link below.

Who to contact

Your Business Relationship Manager at your Bank should be your first port of call as they will have a lot of the background information to hand.

Anticipated availability

We understand that the Banks will be publishing details of the Scheme within the next few days, however if the situation is urgent then we would advise you to contact your bank straight away.

Further information

Please see the Government Publication “Covid-19 Support for Business”

Useful Links