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Business Loans for Companies and Businesses During The Coronavirus Crisis

Written by Robert Moore Marketing Manager 3 April 2020

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Business Loans for Companies and Businesses During The Coronavirus Crisis

Through this period of disruption, the Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses. Find out more about two key loans being offered here.

Coronavirus Business Interruption Loan Scheme (CBILS):

(updated and revised following the changes to the scheme announced 02 April 2020)

The Scheme provides facilities of up to £5m for SMEs who are experiencing cashflow issues as a result of the pandemic and up to £25m for firms with revenues between £45m and £500m (Coronavirus Large Business Interruption Loan Scheme).

CBILS will be available for most business finance products such as;

  • term loans,
  • overdrafts,
  • invoice finance
  • asset finance.

The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. 

CBILS: KEY FEATURES

  • Up to £5m facility repayable over a period of up to 6 years (SMES) or £25m for larger businesses
  • 80% guarantee to the Lender
  • Interest and fees paid by Government for 12 months
  • Overdrafts and Invoice Finance for 3 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.
  • When borrowing up to £250,000, a personal guarantee is not required
  • Companies taking out these loans are 100% liable for the debt and there are no restrictions on the interest rates banks charge

Please note: This scheme is just one of a number of measures announced by Government and you can find full details of the temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19 here.

Am I eligible for this loan?

Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, the SME must:

  • Be UK-based in its business activity, with annual turnover of up to £45m (or up to £500m to be eligible for the Coronavirus Larger Business Interruption Loan Scheme)
  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

How do I access this finance?

The loans are available through the lenders accredited by the British Business Bank, you can see a list of them here.

Initially, businesses should approach their own lender preferably via their website as call centres are likely to be very busy. There is no problem if they want to access alternative finance providers but of course they will need to treat you as a new customer which may mean more paperwork etc.

The COVID-19 Corporate Financing Facility

This scheme allows the Bank of England to buy short term debt from larger companies.

It supports companies which have been affected by short-term funding squeezes, allowing you to finance your short-term liabilities. It also supports corporate financial markets, aiming to ease the supply of credit to firms.

To find out more about this scheme including the eligibility criteria and how to access it, visit the Bank of England's website.

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