ABF's Introduction to the Governments emergency ‘Coronavirus Business Interruption Loan Scheme’

Date 23rd March 2020 //
Author ABF

Over the last few weeks, the landscape and outlook for business has changed more than we ever might have imagined. In several announcements, starting with the Budget on March 11th 2020 the Chancellor has announced new initiatives – a series of support programmes – for UK businesses.

At the heart of the support for business is the ‘Coronavirus Business Interruption Loan Scheme’ or CBILS, that is now operational.

What is the Coronavirus Business Interruption Loan Scheme?

The CBILS is comprised of several options for business including different varieties of finance.

These include:

· Term Loans

· Invoice Finance

· Overdraft facilities

· Asset Finance

The scheme is administered by the British Business Bank and the funds are distributed through a variety of finance providers. These providers are highlighted on the Alternative Business Funding platform and information is available through the Alternative Business Funding Coronavirus Business Interruption Loan Scheme pages.

The terms of lending are very attractive and will help supportive businesses who through no fault of their own find themselves unable to access funding in the current COVID-19 situation.

How does the CBILS work?

The scheme provides the finance provider with a government-backed guarantee against the outstanding loan or facility balance, helping to turn a ‘no’ decision from a lender into a ‘yes’. Important Note: The borrower always remains 100% liable for the debt.

The Government will cover the first 12 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital. The maximum value of a facility provided under the scheme will be £5 million.

It is important to remember that this situation is developing rapidly, and the detail of the scheme is likely to be adapted as the weeks unfold.

Am I eligible for the Coronavirus Business Interruption Loan Scheme?

You are eligible for the CBILS if you are any of the following:

· A UK based, with turnover of no more than £45 million per annum

· Your business operates within an eligible industrial sector (a small number of industrial sectors are not eligible for support or subject to limitations – See list here

· You can confirm that you have not received de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years

· You are unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term

We expect the full eligibility criteria to be developed over the coming weeks.

What are the terms of the Coronavirus Business Interruption Loan Scheme?

The CBILS 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.

IMPORTANT: While the Government has responded to the Coronavirus pandemic with a variety of guaranteed loan schemes and grants it is vitally important that as a business owner you recognise the following:

Although the Coronavirus Business Interruption Loan Scheme (CBILS) is generous and wide ranging, there will be many businesses who will be unable to access this scheme due to the financial profile of their business PRIOR to the coronavirus pandemic.

To access the scheme will require businesses to prove that pre-virus they had been profitable, and trading soundly for 2 years.

The scheme is meant to protect businesses who have been specifically impacted by the virus, and can be expected to return to profitability once the emergency has been lifted.

The ABF platform hosts funders delivering the CBILS support, however for businesses who do not meet the relatively tight requirements of CBILS and who still require funding, ABF has a large variety of funders who continue to provide funding.

We suggest the following two steps:

Register on the platform today and select ‘Quick Submit’
We will review your enquiry and assess funders best suited to your business situation, including funders delivering the CBILS support where appropriate

Just because you may not be eligible for the CBILS support, does not mean that funds are not available to see your business through this challenging situation.

At Alternative Business Funding supporting UK Businesses is fundamental to what we do, and we continue to work closely with our funders and new initiatives to provide you with the most suitable options available.