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Everything You Need to Know About CBILS

We explore the Coronavirus Business Interruption Loan Scheme (CBILS) and how it can help small and medium-sized businesses affected by Covid-19

By Jyoti Patel

Please note, both CBILS & CLBILS closed on 31st March 2021. You can read more about similar financial support currently available to you here.

The UK Government has introduced a package of measures to support businesses through the coronavirus pandemic. The Coronavirus Business Interruption Loan Scheme (CBILS) is one such measure.

In this guide, we explore everything you need to know about CBILS, including how it works, how to apply and how it differs from CLBILS.

What is CBILS?

The Coronavirus Business Interruption Loan Scheme (CBILS) provides businesses negatively impacted by coronavirus with access to government-backed funding.

Businesses across the UK have experienced a drastic hit to their cash flow because of the pandemic. CBILS aims to support these businesses by giving them access to a range of finance products of up to £5 million over a term of up to 6 years.

How does CBILS work?

CBILS is available through the British Business Bank's list of accredited lenders. There are currently over 90 lenders offering products under the scheme, including all of the major UK high-street banks, some challenger banks and a number of smaller local lenders.

Through CBILS, accredited lenders can provide up to £5 million to an eligible business in the form of a term loan, an overdraft, invoice financing, or asset finance.

Although the borrower is fully liable for the debt, the scheme encourages lenders to provide finance to businesses by guaranteeing 80% of each loan.

This serves two purposes:

1. It encourages lenders to keep providing UK businesses with funding

2. It means that more small and medium-sized businesses can access the cash they need to stay afloat during this unprecedented time

It's important to understand that all CBILS products are loans, and not grants, so must be paid back in full.

Is my business eligible for CBILS?

CBILS is currently available to UK businesses that have an annual turnover of no more than £45 million. Businesses must also be considered viable by an accredited lender and demonstrate that they've been adversely impacted by coronavirus.

Updates to CBILS also mean that a lender can now offer you a CBILS product even if you meet the criteria for one of their other finance offerings.

The scheme is available to most businesses, however, there are some businesses that aren't able to access CBILS including banks, insurers, public-sector bodies, grant-funded further-education establishments and state-funded primary and secondary schools.

How can I apply for CBILS?

CBILS was open for applications until 31st March 2021 and is now closed.

If you applied before this date, the process would have been as follows:

You need to apply directly with an accredited lender. The British Business Bank advises that you apply through a lender's website, as phone lines are likely to be exceptionally busy.

It's worth checking if your current business bank is an accredited lender and can offer you a CBILS product. Not all lenders will be offering the same product - so it's crucial to do your research to establish which CBILS lender and product best suits your business' needs at this time.

When applying, you'll need to have the following information to hand:

This information will allow the lender to assess whether you're borrowing for a suitable purpose, that you're applying for the right type of finance product, and that the loan is affordable for your business. The lender will want to see that you weren't an "undertaking in difficulty" on 31 December 2019, however this assessment can be carried out at the point of application.

You should also check which additional documents your accredited lender requires. In general, it's useful to have the following to hand:

What about security on CBILS loans?

In terms of security, a Principal Private Residence (PPR) can't currently be taken as a form of security on a CBILS product.

Personal guarantees may be taken on products over £250,000, but can't be taken for any product below the value of £250,000.

If a personal guarantee is taken, recoveries are capped at a maximum of 20% of the outstanding balance after the proceeds of business assets have been applied.

Which lenders are currently offering CBILS?

There are over 90 accredited UK lenders currently offering CBILS, including all the major high-street banks. You can view the official list of accredited lenders on the British Business Bank's website here.

What about CLBILS?

If you manage a larger business with an annual turnover of over £45 million, you won't be able to access CBILS. Instead, Government launched The Coronavirus Large Business Interruption Loan Scheme (CLBILS) on 20th April 2020 to support large businesses negatively impacted by Covid-19 with an annual turnover of over £45 million.

Through CLBILS, medium and large UK businesses can access government-backed loans such as term loans, revolving credit, invoice finance and asset finance through accredited lenders. Loan values are as follows:

As with CBILS, CLBILS lenders will have a government-backed guarantee of 80% of the outstanding loan value. Personal guarantees won't be taken for loans of under £250,000 in value, but can be taken for loans above this figure.

What other support can my business access?

CBILS and CLBILS are part of a larger package of measures rolled out by government to support UK businesses, such as delays and deferments of payments to HMRC and the Coronavirus Job Retention Scheme.

We've written an article exploring all current government schemes, along with what UK banks are offering too.

In addition, there are several online resources set up specifically to help you manage your business during these unprecedented times. It's worth bookmarking our dedicated coronavirus business advice hub, which features articles from experts covering everything from the IR35 delay to supporting your remote working staff during this time.