The temporary Coronavirus Business Interruption Loan Scheme will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.
The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major banks.
The scheme is now open for applications. All major banks are offering this scheme.
To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. Please note that branches may currently be shut down to enable social distancing.
The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.
If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
To be eligible for the scheme your business must have a turnover of no more than £45 million per annum, be seeking a facility up to £5 million, operate within any business sector (Some different terms will apply for a small number of sectors, including for some agriculture, aquaculture and transport businesses) and be able to evidence viability. (Lenders will assess the viability of a business before Covid-19 disruption, accepting that there may be short-to-medium term performance impacts during the current environment).
Lenders will assess whether the Coronavirus Business Interruption Loan Scheme is an option for your business once they have assessed it and confirmed that they are not able to provide finance under the normal criteria.
Businesses from any sector can apply, except the following:
The scheme is accessible through businesses’ normal points of contact with lenders. If businesses have concerns about their finances, they should contact their lender for support as early as possible. Given the high volumes of calls that all banks are receiving now, including from vulnerable customers requiring immediate support, businesses may want to contact their lender online first. Lenders’ dedicated Covid-19 support pages will provide further information.
The scheme will be available to businesses from the week commencing 23 March 2020. Lenders’ standard facilities are available today and businesses should not hesitate to go to lenders’ online advice pages or ask lenders to ask about these options.
Banks are experiencing a significant number of calls, including from vulnerable customers, and it will be much quicker for businesses to check the guidance online to identify the best way to access the scheme.
While lenders are committed to providing access to the scheme for businesses some lenders may take a few more days to ensure the scheme can be deployed through their channels. Firms are working as quickly as they can to ensure businesses can access the support they need.
If a business is eligible for the CBIL scheme, then the government will provide a grant payment to SMEs to cover the interest and initial fees levied by the lender (e.g. arrangement fees) in the first twelve months so that the SME does not have to cover these. After this twelve-month period interest will be payable and lenders will let businesses know what this cost of this is. With a loan facility it may be necessary to provide capital repayments on a regular basis.
But lenders may be able to provide capital repayment holidays subject to discussions with them.
Businesses who borrow under the CBIL scheme will also not be subjected to early repayment charges should they chose to repay their financing before its term ends. Businesses will still be 100 per cent responsible for paying the facility back, as well as interest and fees charged by the lender after twelve months.
Products covered by the scheme have a maximum term of six years, however for overdraft and invoice finance facilities, please note that terms are up to three years.