The Coronavirus Business Interruption Loan Scheme (CBILS) is due to end on 31 March 2021, after which no further applications for the scheme can be made.
CBILS allows businesses to apply for a loan of between £50,001 and £5 million up to 25 per cent of their annual turnover from lenders accredited the British Business Bank.
The CBILS come with a range of benefits, rarely available with commercial lending, such as:
- No repayments for the first 12 months
- All fees covered by the Government
- No interest payable for the first 12 months
- Unsecured lending, with no personal guarantees, up to £250,000
- No penalties for early repayment of the loan.
The replacement Recovery Loan scheme, which offers loans of up to £10 million per business, seems to be a riskier and less attractive option for many businesses and so it is important to act now if you require financial support from the CBILS.
To be eligible, businesses must meet the following criteria:
- Be UK-based in its business activity;
- Have an annual turnover of no more than £45 million;
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic;
- Self-certify that the business has been impacted by the Coronavirus (COVID-19) pandemic; and
- Not be classed as a business or ‘undertaking’ in difficulty.
You will need to provide certain documents when you apply for a CBILS-backed facility. These requirements vary from lender to lender, but are likely to include:
- Loan amount, purpose, and term
- A short paragraph on the business background and how it has been impacted by COVID-19
- Last two full sets of filed accounts
- Bank statements covering November 2019 to present
- Shareholder and directors’ details
- Up to date management accounts
- Current debt position of existing loans and borrowing.
There are a variety of products available under the scheme, from various accredited lenders, including:
- Term loans
- Asset finance
- Invoice financing
- Property finance
- Debt refinancing
- Merchant cash advance
If you haven’t benefited from the scheme, but think that this finance could help you either now or in the future, it is worth considering taking out a CBILS loan before the application window closes.
Those who have already obtained one CBILS loan can take out additional finance via the scheme as well, while those who have previously taken out a smaller Bounce Back Loan can also transfer this into the CBILS and borrow more.
You will just need to ensure that you request enough funds to cover the cost of repaying your Bounce Back Loan, in addition to the extra funds you want to request through the CBILS.
To apply for finance via the CBILS, borrowers need to have started an application by the end of the day on 31 March 2021.