Coronavirus business interruption loan scheme expanded for small business

• Personal guarantees cannot be taken for any facilities below £250k

• Insufficient security no longer a condition to access the scheme

• Personal guarantees may be required for facilities above £250k but capped at 20% of the outstanding balance after business asset recoveries

• Lenders to retrospectively apply changes

The Coronavirus Business Interruption Loan Scheme (CBILS) has been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the Coronavirus crisis can access funding.

Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme.

Since CBILS launched less than two weeks ago, almost 1,000 facilities valued at £90.5m have been approved by lenders accredited to the British Business Bank’s CBIL Scheme. More than 80% of the UK’s smaller businesses have a finance relationship with CBILS accredited lenders.

About the scheme

The Coronavirus Business Interruption Loan Scheme, delivered through 40+ British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

It supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

Updated scheme features

• No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
• Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
• Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment.

We have communicated that these changes should be retrospectively applied by lenders for any CBILS facilities offered since 23 March 2020. For any commercial (non-CBILS) facilities offered since the same date, providing the borrower meets the CBILS eligibility criteria, lenders have been asked to bring these facilities onto CBILS wherever possible (e.g. where the lender is accredited to offer the same facility through CBILS) and changes retrospectively applied as necessary.

New eligibility criteria

Smaller businesses from all sectors4 can apply for the full amount of the facility. To be

eligible for a facility under CBILS, a smaller business must:

• Be UK based in its business activity, with turnover of no more than £45m per year.
• Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.
• Self-certify that it has been adversely impacted by the Coronavirus (COVID-19).

Keith Morgan, Chief Executive, British Business Bank, said: “It was essential to get the Coronavirus Business Interruption Loan Scheme up and running as quickly as possible to get additional funding flowing to smaller business. We have seen an incredible demand for CBILS since it launched, so opening up access to the scheme to even more smaller businesses across the UK will enable lenders to expand their support, deploying vital funding where it is most needed.”

How to apply

CBILS is available through the British Business Bank’s 40+ accredited lenders, which are

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. Not every accredited lender can provide every type of

finance available under CBILS.