CBILS is a government loan scheme aimed at providing financial support to small and medium-sized businesses that have lost revenue or seen disruptions in cash flow as a result of the coronavirus (COVID-19) pandemic.

How does CBILS work?

Although CBILS is managed by the British Business Bank, access to the government- backed credit facilities will be through the over 40 accredited lenders that are part of the scheme. This includes the processing and eligibility assessment of the applications and the issuing of funds.

In order to encourage lenders to accept more applications, the government is guaranteeing 80% of all money lent through the scheme. The borrower, however, remains 100% liable to repay the debt.

Lenders will pay a fee to access the 80% guarantee, but that fee will not be charged to businesses that apply for a loan.

Businesses that need to use the CBIL scheme will also receive an interest free holiday, where the government will pay the interest charges and any associated fees from the lender for 12 months.

Access to the scheme was recently opened up to smaller businesses facing cash-flow difficulties that previously would not have been eligible for CBILS.

If your business has been declined a loan through CBILS previously, you should consider re-contacting your lender and see if you can apply again.

How much can businesses borrow through CBILS?

Businesses with a turnover of less than 45m can apply for business loans starting from 50,001 and going up to 5 million.

If you're looking to borrow up to 50,000 then you might want to consider the Bounce Back Loan Scheme (BBLS) that lets you borrow between 2,000 and up to 25% of their turnover, or a maximum of 50,000.

Lenders will not take personal guarantees of any form for loans under 250,000.
However, for loans above 250,000, personal guarantees may still be required at the lender's discretion, with the following stipulations:

  • They exclude the Principal Private Residence (PPR)

  • Personal guarantees are capped at a maximum of 20% of the loan.

What is a personal guarantee?

A personal guarantee is an individual's legal promise to repay debt issued to a business for which they serve as an executive or partner. This means that if the business becomes unable to repay debt then the individual is personally responsible to make the repayment.

Who is eligible for CBILS loans?

Small and medium-sized businesses can apply for the government business loans through the Coronavirus Business Interruption Loans Scheme if they meet this criteria:

  • Are based in the UK

  • Have a turnover of up to 45 million

  • Would be a viable business if it were not for the pandemic

  • Can show that the business is negatively impacted due to coronavirus

Who cannot apply?

Businesses from any sector can apply, except:

  • Banks

  • Insurers and reinsurers

  • Public-sector bodies

  • State-funded primary and secondary schools

For those that want to apply for a government business loan of 30,000 or more, they also need to confirm that their business wasn't classed as a business in difficulty on 31 December 2019.

How long is a CBILS-backed loan for?

The length of the credit facility through CBILS depends on the type of finance you apply for.

  • For loans and asset finance, it can last up to 6 years

  • For overdrafts and invoice finance facilities, it can last up to 3 years

How to apply for a CBILS loan

Businesses can apply directly with any of the 40 accredited lenders or through a business loans broker.

If you apply directly with a lender you'll need to tell the lender:

  • the amount you'd like to borrow

  • what the money's for

  • how long you'd like to pay it back

  • provide any supporting documents

Going through a broker can be useful as a broker can review the application and identify a lender they think is most suitable for a given business.

A broker may even approach different lenders in this process. If one lender refuses an application from a business, then the business can reach out to another lender in the scheme. How each lender accesses risk can still vary from lender to lender.

What supporting documents will businesses need to provide for CBILS?

The following documents may be required to apply for CBILS:

  • Management accounts and historic accounts

  • Business plan

  • Cash flow forecasts

  • A list of your business asset

You may not need all of these to successfully apply for CBILS as loan providers may vary on their specific requirements.

Most brokers should already be aware of the documentation required for each lender under CIBLS and can therefore help you to prepare the application accordingly.

What do lenders look for when assessing a CBILS application?

Individual loan providers have their own criteria for assessing the eligibility for any loan application. Typically, lenders will check that the loan is:

  • for a suitable business purpose

  • affordable for you

  • the right type of finance for your needs.

Which lenders are accredited as part of CBILS?

Decision-making on whether your business is eligible for CBILS is in the hand of the over 40 accredited CBILS lenders. These lenders range from high-street banks and challenger banks to asset-based lenders and smaller specialist local lenders.

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