The Government recently announced the Coronavirus Business Interruption Loan Scheme “CBILS”, operated through the British Business Bank on behalf of the Government.

There are in excess of forty lenders and as a practise we have been asked to partner up with one of the providers of the loans. We also work very closely with brokers and ABLs, who should in the right circumstances be able to help.

In recent days it has become clear that in order to be eligible for the loans you are required to provide a whole host of financial information and projections. In these unprecedented times, a lot of the financial information will be held in various locations as will key members of staff, therefore making the task that much harder.

We thought it may assist you if we provided an overview of how the system works and what criteria and information is required by lenders.

Some key information around the “CBILS”:

  • Loans of up to £5m over a term of between one and six years for companies with turnover less than £45m
  • Interest-free for 12 months
  • Government secures 80% of the loan (please note, the borrower is 100% liable for the borrowing)
  • Some of the alternative lenders that offer “CBILS” specialise in different products (e.g., asset finance or invoice finance) – the banks cover all products
  • Applicants must go to their own bank first. If not, this will be questioned and it is likely they will be asked to go via that route
  • They will first look to see if the applicant qualifies under a conventional product before considering “CBILS”
  • If an application is incomplete it will probably be rejected and the applicant will have to reapply, leading to delays
  • Each lender will have their own application form to complete as part of the submission. These can usually be found on the lender’s website
  • The ‘big four’ banks aren’t asking for PGs for “CBILS” below £250k
  • Borrowers need to submit the latest financial information as well as a 12-month cash flow forecast. They will expect the borrower to have taken other measures also (VAT deferment, debt repayment holidays, rent breaks etc.)
  • All applications and accompanying information must fully support the amount being requested and the borrower must demonstrate that they can repay the loan when the business is back trading full time

The British Bank website can be found here.

Applicants will need to explain:

  • How the virus has affected their business?
  • What steps have been taken to safeguard the business e.g., staff furloughed, reduced hours, have crucial cost cuts been undertaken? 
  • What other forms of Government help have been applied for
  • The loan amount has to be repaid within the agreed term so therefore, it has to be realistic
  • Lenders will only support businesses that were viable prior to the outbreak and will be viable once the economy starts to rebuild (if a business was declined for facilities recently then there is reduced chance of them being successful with the application)

We hope that the brief overview is of assistance to you and your clients. If you need to discuss the above or have any other questions, the partners and team are here to help and their contact details can be found here.