Coronavirus Business Interruption Loan Scheme - CBILS FAQs

Covid-19 will have a significant impact on cashflow for many businesses.  The Government have announced details of how it is planning to help, with the introduction of the Coronavirus Business Interruption Loan Scheme. (CBILS)

What is CBILS?

• CBILS, or Coronavirus Business Interruption Loan Scheme, is a government backed loan scheme introduced to try and help businesses with short term cashflow problems caused, or likely to be caused, by the Coronavirus outbreak.

What businesses are eligible for the scheme?

To be eligible your business must:

• Have a UK based business activity with annual turnover or no more than £45m
• Have a borrowing need because of the Coronavirus outbreak
• Have a borrowing proposal which the lender:
  • would consider viable, were it not for the COVID-19 pandemic
  • believes will enable you to trade out of any short-term to medium-term difficulty

Smaller businesses from most sectors can apply for the facilities.

What types of Finance are available under the scheme?

• Term loans I.e. traditional loans
• Overdrafts
• Asset Finance I.e. borrowings against the business assets such as plant and machinery or stock
• Invoice financing I.e. borrowings against your debtors ledger

How much can I borrow and what are the key features?

• Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m.
• 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
• No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
• Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments.
• Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
• Security: At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
• The borrower always remains 100% liable for the debt

Are there other options I should consider before applying for CBILS?

Yes.  Our COVID-19 Hub details the latest measures introduced by the Government. Whilst most businesses will hopefully already be looking into these measures, applications for CBILS will have a better chance of success if businesses are actively managing cash by utilising grant funding under the available government schemes. Lenders want to see you are exhausting all other options and assessing the effect of these options on short term cashflow, before thinking of applying for a loan.

I have existing loans and facilities but need further funding, should I apply for a loan under the CBILS?

If your business already has some form of debt the practical advice would be to speak to your lender(s) about relaxing existing terms or conditions with your current loans/facilities first rather than taking on more debt. Options may include:

• Some form of capital repayment holiday on existing term loans
• Increasing the limits on your existing credit cards
• Extending of current temporary overdraft facilities

Once these options have been explored, then you may conclude that a loan under CBILS is also appropriate.

How do I apply for CBILS?

The advice from Government via the British Business Bank is to first contact your bank relationship manager. If you don’t have a designated relationship manager, the advice is to apply for the loans on your bank's website.

What will give me the best chance of successfully applying for finance under the CBILS?

The banks will need to understand and be convinced that your business can support finance in the short/medium term. There is no guarantee the application will be successful and therefore it is key any financial and non-financial information submitted on the application is robust and has been thought through in detail.

Whilst each approved lender will no doubt have small differences in their own application process, they will all principally want to see a well-structured, thought out plan to give businesses the best chance of securing funds. Some key information and practical advice to consider in advance:

• Prepare a summary of historic trading (preferably with a cashflow) including latest management accounts
• Prepare a summary and detailed breakdown of a short/medium term REALISTIC forecast, including a cashflow. The forecast will need to include the cash impacts of schemes such as the Job Retention Scheme and other government measures currently available.
• Prepare a summary of your business operations including details of your assets – so that lenders can assess which type of finance under the CBILS is most suitable.
• Be open and honest to your relationship manager and understand their position is also difficult, dealing with a  fast changing environment– we are all human and your relationship manager will be dealing with the same issues we all currently facing so showing a little empathy, patience and understanding may go a long way.
• Personal Guarantees may be required – Security is at the discretion of the lenders therefore some of the banks currently require security in the form of personal guarantees. Based on recent discussions with our banking contacts, in this current climate, you are more likely to obtain CBILS funding through your existing Bank as opposed to another mainstream bank. - Banks are unlikely to have the appetite to lend to businesses who are not currently customers. 
• Other specialist funders, outside the 40 accredited lenders, may be able to help, but not currently under the CBILS.

CBILS could be the lifeline that businesses currently need. Current expectation is that cash from the Job Retention Scheme may not be available until the middle of May and we are expecting the demand for bank facilities to meet cashflow requirements in the interim to be significant. You will need to ensure the application and forecasts are credible and easy for the banks to process quickly. We are in regular communication with our banking contacts and we are highly experienced in how best to present a funding proposal -  we understand what they need for your CBILS loan application to have the best chance of success, and have the resources to act quickly with any help needed.

Please do get in touch with your normal Shorts contact to talk things through, or one of our Covid-19 support coordinators (David Robinson, Scott Burkinshaw or Martin Dean). 

Please be assured that we are ready to help.

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• Job Retention scheme
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