Business Support 06/04/2020

In the second of our updates regarding the support Government is making available to businesses, we’ve produced the below on the Coronavirus Business Interruption Loan Scheme (CBILS):

The facility is a Loan Guarantee, the bank loans the business money with the Government providing the bank with an 80% Guarantee.  Personal Guarantees will be required for 20% of the loan for loans over £250,000, but lenders cannot take business owners house as security. Below £250,000 the lender is not allowed to request a Personal Guarantee. It is not risk free to the bank but they are likely to be supportive where they can be.

Key Criteria:

  • Businesses with less than £45m turnover
  • All businesses affected by Covid-19 are eligible except banks insurance and public sector businesses, only a very few exceptions
  • A sound borrowing proposal
  • Amount – £1,000 to £5,000,000
  • Term – Up to 6 years
  • Interest – Interest free for the first 12 months followed by sensible low rates
  • Capital repayment holiday (at lenders discretion 12 months on offer from several)
  • Fees – No arrangement fees are being levied
  • Administered by the British Business Bank
  • These are being made available from 23 March 2020 initially for six months

Who is offering this and what finance is available?

British Business Bank operates CBILS via its accredited lenders. There are over 40 of these lenders currently working to provide finance. They include:

  • high-street banks
  • challenger banks
  • asset-based lenders
  • smaller specialist local lenders

A lender can provide up to £5 million in the form of:

  • term loans
  • overdrafts
  • invoice finance
  • asset finance

CBILS gives the lender a government-backed guarantee for the loan repayments to encourage more lending.

What will lenders need from you?

When you apply for a business loan, most lenders will ask you for the following:

Loan Details:

  • The amount you would like to borrow
  • What the money is for — the lender will check that it’s a suitable business purpose and the right type of finance for your needs
  • The period over which you will make the repayments — the lender will assess whether the loan is affordable for you

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

The above requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

Note: For many customers approaching their existing lenders for a smaller facility, the process may be automated and therefore may not require the same level of documentation.

We’d like to repeat the following, as we’re aware that increasingly convincing emails are being sent:

Please beware of emails and messages pertaining to be from HMRC. Take extra caution at this time and do not click on links or share personal details. Please talk to HMRC if you want to confirm whether any correspondence is genuine.

We’ll continue to provide details of the Government support, in the meantime all of us at CAI wish you and yours good health.