As many of you are aware on Wednesday 11 March 2020, the Chancellor announced a ‘Coronavirus Business Interruption Loan Scheme (CBILS)’ which would become available ‘over the coming weeks’. However, following the rapid escalation of the pandemic, the Chancellor has just announced an extension of the financial support that the Government is offering to businesses and individuals. This has been brought forward and the new scheme is expected to become available in the week commencing 23 March 2020.

The most applicable changes to the scheme for SMEs include:

  • The extension of the CBILS from £1.2m per business to £5.0m per business. These loans will be guaranteed by the Government and will require no interest payments for the first 6 months. In combination with a larger business scheme, a total of £330bn of guarantees will be available with more liquidity to be provided if required. There was no mention of the guarantee level increasing above the 80% level previously announced.
  • Confirmation that the action taken by the Government to advise people to stay away from leisure and hospitality venues will count as an event for the purposes of insurance claims to be made by these businesses.
  • A rates holiday for all businesses in the leisure, hospitality and retail sectors of 12 months with cash grants of £25,000 per business for those with a rateable value of less than £51,000.
  • Cash grants of £3,000 for small businesses that pay business rates of less that £12,000 announced in Wednesday’s budget will be increased to £10,000 per business.
  • The loans will be provided by the British Business Bank through participating providers, and will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak. The scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

To be eligible for support via CBILS, the business must:

  • Be UK based, with turnover of no more than £45 million per annum.
  • Operate within an eligible industrial sector. However, there are a small number of excluded/restricted sectors arising primarily from EU de minimis-State Aid rules. A full list of exclusions can be obtained from here.
  • Be able to confirm that they have not received de minimis State Aid beyond €200,000 equivalent over the current and previous two fiscal years (however, we have discussed this with a number of lenders and we have advised this condition is likely to be removed).
  • Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements.
  • Finance terms are from three months up to ten years for term loans and asset finance and up to three years for revolving facilities and invoice finance.

We are sure companies will want to look at this quickly, but may find it hard to navigate the requirements of the scheme and provide the financial information required for the lenders to process the application. Therefore we will be offering our services to assist with your CBILS application with no upfront cost to you. Our services will include:

  • The development of the borrowing proposal which will include review of financial information provided by you.
  • Utilising our networks
  • Assistance with any CBILS application procedures

We ask those interested to please contact us and we will be in communication with you once full eligibility criterion have been disclosed to us.

While these are challenging times for our industry, please know that we are doing everything we can to minimise the impact on our clients. We are closely monitoring the situation around-the-clock and are working with our banking partners to understand the eligibility criteria and application requirements.