Coronavirus Business Interruption Loan Scheme (CBILS)

Benefits of Coronavirus Business Interruption Loan Scheme

• Up to £5 million facility — loan of amount up to £5 million.
• 12 months finance interest free — Government to cover interest for first 12 months.
• 80% Guarantee — Government to provide lenders with a guarantee of 80% on each loan.
• No guarantee fee— No fee for smaller businesses.
• Finance terms—
  • up to six years for term loans and asset finance facilities.
  • up to three years for overdrafts and invoice finance facilities.
• The Coronavirus business interruption loan scheme (CBILS) has been extended until 31st January 2021.

Borrower always remains liable to pay 100% of the principal and interest after 12 months.

Provisions to provide further discretionary financial support to businesses

Type of loans under CBILS

CBILS supports a wide range of business finance products, including:

• Term facilities
• Overdrafts
• Invoice finance facilities
• Asset finance facilities
• Refinancing

Eligibility Criteria for Coronavirus Business Interruption Loan Scheme (CBILS)

Your business may be eligible if it:

• UK based
• has turnover of no more than £45 million per annum
• Operate within an eligible industrial sector (a small number of industrial sectors are not eligible for support such as banks, building societies, insurers and re-insurers (but not insurance brokers), professional, public sector, employer, religious or political membership organisations, or trade unions.)
• Be able to confirm that they have not received EU de minimis State aid beyond €200,000 equivalent over the current and previous two fiscal years
• Have a borrowing proposal which, were it not for the Covid-19 pandemic, would be considered viable and for which the provision of finance will enable trading out of any short-to-medium term difficulty
• Have a sound borrowing proposal, but insufficient security to meet the lender’s requirements

CBIL will only be considered where a conventional facility for the same amount could not be offered because there is no or insufficient lending security.

Eligibility restrictions for CBILS

Please note that a limited number of further eligibility restrictions do apply. Full details can be found here.

Almost all business sectors are eligible, however there are a small number of excluded/restricted sectors arising primarily from EU de minimis-State aid rules.

Now, Further education establishments have also been eligible for loans under (CBILS) across the UK.

Also Read: Key Points of Budget 2020

Suitability of CBIL for Businesses

CBIL is suitable for businesses that:

• need a loan for working capital, expansion project, diversification or development.
• need a loan for more than £250,000 but do not have sufficient lending security to meet conventional lending requirements, or
• need a loan for less than £250,000 which would not have been provided without the availability of the CBIL Scheme.

Viability of Coronavirus Business Interruption Loan Scheme (CBILS)

The business needs to demonstrate that it:

• will be able to meet all its repayment obligations, including repayment of the proposed CBIL.
• has a viable business proposition.

CBIL will be considered if:

• The finance will help the business trade out of any short to medium term cashflow difficulties and
• If the facility is granted the business should not go out of business in the short to medium term.

Viability will be considered in relation to future trading expectations and business plans.

Also Read: Coronavirus Grant for Small Businesses by the Government

How can DNS help

DNS is able to help you with entire application process. We will create your application pack and fill loan application form for you.

One we have created loan application pack you have two options

1. Apply to your existing business bank, or;
2. We apply to multiple lenders via our partner platform Capitalise.

Once we submit all the information and documents with Capitalise, they follow up and directly reach out to you.

We provide the following services as part of Loan Application Pack

• Preliminary viability assessment
• Summary of your business and plans
• Financial performance of your business prior to COVID19 (management accounts)
• Covid19 Impact Report
• Cash Flow forecast demonstrating
  • Impact of COVID19, and;
  • Financial viability
• Gather all the relevant document
• Fill Loan Application Form
• Create an application pack

Also Read :-

• Limited Company Expenses You Can Claim When Working From Home
• Government Announces ‘Unprecedented’ Measures for Small Businesses to Fight Coronavirus Crisis

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.