- For small and medium-sized businesses, a new Coronavirus Business Interruption Loan Scheme (CBILS) will provide support for businesses to access a wide range of funding facilities including: overdrafts, loans, asset finance and invoice finance.
- The government will provide lenders with a partial guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs.
- The government will not charge businesses or banks for this guarantee, and the scheme will support loans of up to £5 million in value. The first 12 months of these loans will be interest and fee free, as the Government will cover these payments.
- Overdraft and invoice finance facilities will be for a term of up to three years and loans and asset finance, up to six years.
- Businesses will be able to get finance under the scheme from a large number of providers including all the main high street banks.
- To be eligible for the scheme the business must be based in the UK, with turnover on no more than £45 million per year and be unable to obtain finance under the lender’s normal commercial terms.
- The borrower remains liable for 100% of the debt
There is a quick eligibility checklist on the British Business Bank website to help businesses understand if they are eligible to apply for a CBILS-backed facility. This loan scheme is ‘state aid’ and so businesses will also have to confirm that they have not received de minimis state aid beyond €200,000 during the current and two previous fiscal years.
Any business wishing to apply for financing should approach their existing bank or any other participator in the scheme. The exact method of applying will be set by the lender. Applications for finance often involve presenting a business plan in support of the application. If you require assistance with this we can help, so please contact us.
More information on the scheme can be found on the website of the British Business Bank.