Coronavirus Business Interruption Loan Scheme

• Loan of up to £5m over a term up to six years for companies with turnover less than £45m;
• Interest & fee free for 12 months;
• 6 months capital repayment holiday available (has to be requested and justified);
• Government secures 80% of the loan (note the borrower is 100% liable for the borrowing).

British Business Bank website for more information:
https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/

Criteria required:
This is what we can currently deduce; it may not all be completely accurate at this stage.

• Applicants must go to their own bank first;
• Banks will first look to see if the applicant qualifies for a conventional product before considering “CBILS”;
• If an application is incomplete it will be rejected and the applicant will have to reapply and the original will go to the bottom of the pile;
• Personal guarantees are not being requested for loans below £250k;
• Borrowers need to submit latest management information as well as 12-month forecasts (P&L and cashflow). These need to be realistic.
• Borrowers are expected to have taken other measures also (VAT deferment, debt repayment holidays, rent breaks etc);
• In essence any application must fully support the loan request and the borrower must demonstrate (as much as they feasibly can in the circumstances) that they can repay the loan when the business is back trading full time.

Learnings:

• Many are trying to take advantage of this when they either do not need to yet or because they think it is easy/cheap money. It is a loan that has to be repaid and the Government Guarantee will only kick in if the lender has exhausted all other avenues;
• The lender’s guidance notes should be fully understood before completing an application;
• 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, cost cuts (crucial these are done))
  • What other forms of Government help have been applied for
• The loan amount has to be repaid within the agreed term so needs to be realistic.
• Lenders will only support businesses that were viable a month ago and will be viable once the economy starts to rebuild (if a business was declined for facilities recently then there is little chance of them being successful with the application).

Conclusion
This is an absolute minefield which is changing daily. We understand your concerns and frustrations.So please seek our advice and assistance if considering applying for a loan; so together we get it right.