Coronavirus Business Interruption Loan Scheme

Dave Jangid | Debitam By Dave Jangid |
Coronavirus Business Interruption Loan Scheme | Online Account Filing

On 17th  December 2020, the government has announced and updated The Coronavirus Business Interruption Loan Scheme (CBILS) deadline for new applications until 31 st  March 2021.

Business Interruption Loan Scheme (CBILS)

offers support for businesses to access funding if specific eligibility criteria are met. CBILS has been significantly extended along with changes to the specifications and eligibility requirements of the scheme. Changes ensure that even smaller companies around the UK affected by the coronavirus outbreak will receive the funds they need.

The Coronavirus Business Interruption Loan Scheme (CBILS)

is now available through participating lenders:

Crucially, entry to the scheme has been opened for those smaller businesses that had met the criteria earlier for a commercial facility but may not have been eligible for a CBILS loan.

The Government pays you an upfront fee and interest for the first year. After that, these savings are deducted, and the total cost you pay over the life of the loan is 1.8%-7.4% per year.

Insufficient security is no longer a constraint to access the scheme. This results in a significant increase in the number of businesses eligible for the scheme.

The British Business Bank operates CBILS through its accredited lenders. 100 of these lenders are currently working to provide finance such as:

  • High-street banks
  • Challenger banks
  • Asset-based lenders
  • Smaller specialist local lenders

An SME must submit a loan proposal to a bank or an approved alternative lender which, "if it were not for the current pandemic, would be considered viable by the lender." This means that you (lender) must use the provision of finance as a possibility for your business to trade out of any short-to-medium term difficulties. It is an imperative condition of the scheme to discuss your application with both your preferred lender, accountant, or business advisor.

Facilities are available now to cover companies and individual traders operating in sectors not covered by the Enterprise Finance Guarantee scheme earlier like haulage, agriculture, fisheries, and aquaculture.

A lender can provide a loan of up to 5 million pounds in the form of:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

CBILS loans offer the lender government-backed loan repayment guarantees to promote further lending.

However, you (borrower) remain fully liable for the debt.

Within the scheme, no personal guarantees of any kind can be given for facilities under £250,000.

Personal guarantees may also be necessary for facilities over £250,000, at the discretion of the lender, but:

  • Recoveries under these shall be limited to a maximum of 20% of the outstanding balance of the CBILS facility until the proceeds of the company assets have been used.
  • The Principal Private Residence (PPR) cannot be taken as security in support of a personal guarantee or as security for a CBILS-backed facility.

However, the CBIL scheme is part of a broader package of government support for UK businesses and employees.

Dave Jangid | Debitam By Dave Jangid |
Note: Please note that the content of the above blog and the aforementioned information are solely for the purpose of awareness and are informative in nature. The content is designed with intent to ease the understanding while preserving the essence and importance of the compliance rules and shall not be considered as an ultimate replication of the rules. Debitam does not own any responsibility whatsoever for any unpleasant event that may arise due to the misinterpretation of a specific part or whole of the information.
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