Coronavirus Business Interruption Loan Scheme (CBILS)

The scheme closed to new applications on 31 March 2021.

The Coronavirus Business Interruption Loan Scheme (CBILS) was designed to provide financial support to smaller businesses that had been affected by COVID-19, had a turnover of less than £45 million, and were looking for up to £5 million in finance.

(To be approved for finance, these businesses needed to satisfy the scheme’s eligibility criteria.)

CBILS closed to new applications on 31 March 2021.

CBILS was delivered by a range of lenders and partners accredited by the British Business Bank. These lenders and partners provided up to £5 million in the form of:

  • term loans
  • revolving credit facilities (overdrafts)
  • invoice finance
  • asset finance

Repayment terms were:

  • up to three years for overdrafts and invoice finance facilities
  • up to six years for term loans and asset finance facilities

Features of the scheme included the Government making a business interruption payment to cover the first 12 months of interest payments and any lender-levied fees. This meant businesses would benefit from no upfront costs and lower initial payments. Businesses remained liable for capital repayments.

Under CBILS, a lender took no form of personal guarantee for facilities below £250,000. For facilities above £250,000, the lender had discretion to take personal guarantees, but:

  • recoveries under these were 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) could not be taken as security to support a personal guarantee or as security for a CBILS-backed facility

The scheme gave the lender a government-backed partial guarantee (80%) against the outstanding balance of the facility. The borrower always remained fully liable for the debt.

FAQs

What types of finance are available and who offers them? Down arrow

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

  • term loans
  • overdrafts
  • asset finance
  • invoice finance

Note: Not every lender can provide every type of finance listed. CBILS is available through the British Business Bank's accredited lenders.

What fees and interest will I have to pay? Down arrow

There is no guarantee fee for businesses to use CBILS. For the first 12 months, the Government will cover interest and lender-levied fees for the first 12 months after you draw down your facility, via a Business Interruption Payment (BIP).

Interest rates will vary between lenders and will depend on the specific lending proposal. Please speak to your lender, as they will be able to give you full details on what interest rates you'll pay once the BIP has concluded.

Will I need security to get a CBILS-backed loan? Down arrow

Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

  • they exclude the Principal Private Residence (PPR), and
  • 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

For all facilities, including those over £250,000, CBILS supports lending to smaller businesses even where a lender considers there to be sufficient security. Where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility.

A borrower’s/guarantor’s Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility (but a lender may wish to do so to support a commercial facility alongside the CBILS-backed facility).

What types of businesses is CBILS for? Down arrow

CBILS is designed to support a wide range of smaller businesses (i.e. those with an annual turnover of less than £45 million) across the UK that have been affected by the coronavirus crisis.

Are sole traders/freelancers eligible? Down arrow

Provided that they satisfy the other eligibility criteria for the Scheme, CBILS is open to:

  • sole traders
  • freelancers
  • bodies corporate
  • limited partnerships
  • limited liability partnerships, and
  • any other legal entity carrying out business activity in the UK with:
    • an annual turnover up to £45 million, and
    • business activity operating through a business account operating in any sector [8]

The business must generate more than 50% of its turnover from trading activity.

Is the scheme appropriate for start-ups? Down arrow

Potentially, if your business activity is primarily based in the UK. For early-stage businesses in their first two years of trading, the British Business Bank’s Start Up Loans programme (loans from £500 to £25,000 at interest of 6% per annum) may be more suitable.

Visit the Start Up Loans website for more information.

Which businesses meet the “business in difficulty"/“undertaking in difficulty” criteria? Down arrow

A "business in difficulty" or "undertaking in difficulty" includes:

  • individuals or companies that have entered into collective insolvency proceedings
  • limited companies which have accumulated losses greater than half of their share capital in their last annual accounts (this does not apply to SMEs less than three years old [9])
  • partnerships, limited partnerships or unlimited liability companies which have accumulated losses greater than half of their capital in their latest annual accounts (this does not apply to SMEs less than three years old)
  • where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan
  • a company which is not an SME where, for each of the last two accounting years, (i) its book debt to equity ratio has been greater than 7.5; and (ii) its EBITDA interest coverage ratio has been below 1.0.

From 30 July 2020, the business in difficulty test does not apply to micro or small businesses. Micro and small businesses are businesses that have fewer than 50 employees and less than £9,000,000 in annual turnover and/or annual balance sheet total.

However, to be eligible for the coronavirus schemes, micro and small businesses must not be (a) subject to collective insolvency procedure under national law, or (b) in receipt of rescue aid (which has not been repaid) or restructuring aid (and are still subject to a restructuring plan) at the time they apply for a scheme facility.

New guidance issued on 25 September 2020 allows for the "undertaking in difficulty" assessment to be determined at the date of application for a scheme facility. This means that a business that was an undertaking in difficulty on 31 December 2019 but, at the date of application for a scheme facility, is no longer an undertaking in difficulty will now be (in principle) eligible for the scheme.

View the full CBILS FAQs

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