CBIL significantly expanded image for website J&J Commercial Finance

Coronavirus Business Interruption Scheme (CBILS) – Version 2…

Coronavirus Business Interruption Loan (CBILS)– Version 2!

News from the British Business Bank that administers the Coronavirus Business Interruption Scheme (CBILS) as they make amendments to the scheme to benefit more smaller businesses across the UK

Some key points that have changed

  • Personal Guarantees (PGs) cannot be taken on facilities below £250k
  • Insufficient security is no longer a condition to access the scheme
  • PGs may be needed for facilities over £250k but capped at 20% of the outstanding balance after business assets recoveries
  • Lenders to retrospectively apply changes
No PG image for website J&J Commercial Finance CBILS expansion logo for website J&J Commercial Finance

It’s worth noting how the CBILS scheme has evolved over the past few weeks. It was first announced in the budget on 17th March, with the scheme going live on 23rd March so just a week. Following applications to the scheme the big four banks also took the decision to remove PGs from facilities below £250k but other lenders still required them. Now the chancellor has made further amendments to the scheme which will come into effect from Monday 6th April.

Since the launch of the scheme the British Business Bank has said that almost 1,000 facilities with a loan amount of £90.5mil have been approved by accredited lenders.

What if I already have a CBILS loan?

Lenders are being asked to retrospectively apply the changes to the scheme for any successfully completed CBILS loans

What if I accepted a Commercial Facility?

If businesses were offered and accepted a Commercial facility, then lenders are being asked to move those facilities onto CBILS. This is providing that the borrower meets the CBILS criteria and that the lender is accredited to offer the facility.

What happens if a lender turns you down?

If one lender turns you down for the scheme you can still apply to other accredited lenders. If you were previously declined through the initial CBILS scheme you should consider re-contacting your lender.

Am I eligible for CBILS?

Your business must:

  • Be UK Based in its business activity
  • Have a turnover of less than £45million
  • Have a proposal that is considered viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by Coronavirus (Covid-19)
  • Generate more than 50% of its turnover from trading activity

What facilities are available through CBILS?

Each accredited lender will be able to provide certain facility types and not necessarily all of them it could include

  • Term Loans
  • Overdraft / Revolving Credit
  • Asset Finance
  • Invoice Finance

Where can I find a list of accredited lenders?

Details of all the accredited lenders can be found on the British Business Bank Website (Click Here)

What documentation is required for CBILS?

Every lender will have their own requirements but generally you will need the following

  • Details of the loan – amount required, what is the money being used for, term of facility
  • Management Accounts
  • Cash flow forecast
  • Business Plan
  • Historic Accounts (normally last 2 years FULL accounts)
  • Assets and Liability statement

If you need help applying for the scheme J&J Commercial Finance is available to help ensuring you have the correct documentation is place for the lender – For an initial enquiry visit our contact page

Summary of scheme and changes

The following has not changed since the scheme launched (23rd March 2020)
  • Provides the lender with a government-backed, partial guarantee (80%) against the outstanding guarantee facility balance, subject to an overall portfolio cap
  • No guarantee fee for smaller businesses to access CBILS
  • A fee charged to lenders for each facility which makes use of the scheme
  • Government has confirmed that the scheme will be demand-led and will be resourced accordingly
  • The maximum value of a facility provided under the scheme is £5m (the original announcement suggested a maximum value of £1.2m)
  • Repayment terms limited to a maximum of six years for term loan and asset finance facilities up to £5m. For overdrafts and invoice finance facilities, terms will be up to three years
  • Available to UK-based businesses with annual turnover of up to £45m per year
  • Principal Privates Residences cannot be secured (prior or post recovery) to support CBIL backed facilities

The table below summarises the changes in the scheme

Coronavirus Business Interruption Loan Scheme
(at 23 March 2020)
Coronavirus Business Interruption Loan Scheme Revised Terms
(6 April onwards)
Use of personal guarantees permissible for all facility sizes, at a lender’s discretion and in line with their normal policies For facilities under £250,000, use of personal guarantees not permitted under the scheme

For facilities above £250,000, use of personal guarantees still permissible in line with their normal policies, but recoveries under these will be capped at a maximum of 20% of the outstanding CBILS facility amount (after other recovery proceeds applied)

Lenders required to demonstrate lending additionality (i.e. lending that without the scheme, wouldn’t have otherwise taken place) Scheme expanded to open-up access to those smaller businesses who would have previously met requirements for a commercial facility and would not have been eligible for CBILS
For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. Insufficient collateral requirement removed, allowing those SMEs who are considered to have sufficient collateral to access CBILS facilities
At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under For facilities under £250,000, use of personal guarantees not permitted under the scheme
For borrowing proposals which, were it not for the current pandemic, would be considered viable by the lender. Viability assessment unchanged but for small loans this determination could be based on the lenders’ internal credit models