CBILS Loans

What you need to know about the Corona Virus Business Interruption Loan Scheme (CBILS)

Updated 20th July 2020

What is a CBILS loan?

 

CBILS provides financial support to SMEs across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

CBILS has been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the coronavirus crisis can access the funding they need. This significantly increases the number of businesses eligible for the scheme.

 

  • If you have been previously unsuccessful in securing funding, you may want to consider reapplying or speak to one of advisors. 

  • The lender is the authority to decide whether to offer you finance, so if you are not approved with one lender you may still be eligible for a CBILS loan with another lender.

 

If your application has been declined, you can apply to a different lender.

 

How does the CBILS loan work?

The British Business Bank operates CBILS via its accredited lenders. There are over 90 of these lenders currently working to provide finance. They include:

  • high-street banks

  • challenger banks

  • asset-based lenders

  • Non-Bank Lenders

A lender can provide from £50,000 up to £5 million in the form of:

  • term loans

  • overdrafts

  • invoice finance

  • asset finance

This is a flexible product – there is a potential to have multiple CBILS across loans, asset finance or invoice finance.

  • Individual lenders may have their own minimum and maximum loan amounts.

 

What is the Government backed guarantee?


The scheme provides the lender with a government-backed, partial guarantee against the outstanding balance of the finance. 

  • There are no guarantee fees for SMEs. 

  • Lenders pay a fee to access the scheme.

 

*Please note: 

  • When taking out a CBILS loan, the business is liable for the full loan amount. If the business is unable to repay, the scheme provides a partial guarantee to the lender, not to the business.

  • Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000.

 

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

  • 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.

  • a principal private residence cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility.

What interest and fees does the Government pay? 

  • The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges. You will therefore benefit from no upfront costs and lower initial repayments.


How do you pay back the CBILS loan?

  • All interest repayments and lender fees will be covered by the government for the first 12 months. 

  • Each lender will have its own criteria, but the term can be up to six years. 

  • Some CBILS lenders require you to start paying capital repayments from month one, others start from month thirteen.

 

Who is eligible?


Your business must:

  • Be UK-based in its business activity

  • Have an annual turnover of no more than £45 million

  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic

  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19)

  • Not have been classed as a “business in difficulty” on 31 December 2019

 

What will lenders need from you?

When you apply for a business loan, most lenders will ask you for the following:

  • The amount you would like to borrow

  • What the money is for — the lender will check that it is for a suitable business purpose and the right type of finance for your needs

  • The period over which you will make the repayments — the lender will assess whether the loan is affordable for you

  • Information on how Covid-19 has affected your business and what you have already put in place to support your business

What supporting documents are required?


You will need to provide certain documents when you apply for a CBILS-backed facility. These requirements vary from lender to lender, but are likely to include some or all the following:

  • Bank Statements

  • Management accounts 

  • Essential Costs and cash flow forecast

  • Business plan

  • Historic accounts including P&L and balance sheet

  • Details of assets

  • VAT returns

  • Your current debt position

  • Aged Debtors and creditors reports

  • Current payment plans

  • HMRC information – e.g. outstanding balances for VAT or PAYE

 

If you do not have everything listed here, do not worry. A CBILS loan could still be an option to provide finance to support your business.


Which lenders are providing CBILS Loans? 

 

  • There are over 90 accredited lenders (as at the end of June 2020) providing Business loans, asset finance, invoice finance and revolving credit facilities. 

  • Not every accredited lender can provide every type of finance listed. A complete list of accredited lenders can be found here or give us a call and we can find the right lender for you.

  • How long will it take to obtain a CBILS loan?Each accredited lender has its own application process, document requirements and criteria. Some lenders will take longer than others depending on demand

  • If you need funds quickly, please let us know right from the start

  • Can you have more than 1 CBILS loan?

  • Yes, you can have more than one loan under CBILS. This can be with the same or another lender, although there are limits on the total amount combined you can borrow under CBILS as well as restrictions of individual lenders. 

 

Can you settle a CBILS loan early?


Yes, you can pay your CBILs loan back and not incur early repayment charges with most lenders. 

 

Can you refinance a current business loan with a loan under CBILS?


Yes, it is possible to refinance a current debt with a loan under CBILS, if by doing so it improves your working capital and the financial stability of your business. 

  • Refinancing can be undertaken with or without an increase in the original borrowing through your current lender or another lender. 

How long are CBILS loans available for?

The Government launched CBILS on the 23 March 2020 and has said it will be available for six months. This means businesses will need to have been accepted for a loan under CBILS by 23 September 2020. Don’t miss out on this unique opportunity to help fund your business requirements. Contact us soon on 01572 729 729 or email us at info@reservoirfinance.co.uk.

What happens if you don’t meet the Criteria for a CBILS loan?


If you do not meet the criteria for the CBIL scheme, there are other funding options available that we can explore for you. lenders are still offering finance on normal commercial terms without the need to make use of the scheme. 

 Contact our experienced Brokers to see how we can help your business grow 

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Belinda Milton t/a Reservoir Finance. Authorised and regulated by the Financial Conduct Authority. Reference number 742264. We are a licensed credit broker and do not provide loans ourselves. Reservoir Finance introduce applicants to finance providers and specialist brokers based on the applicants circumstances. Reservoir Finance may receive a commission from the lender or broker for such introductions.