Updates – Coronavirus Business Interruption Loan Scheme

Apr 3, 2020
Author: Pete Wilmer
Pete leads the Corporate Finance offering at Hawsons, Pete specialises in advising business acquisitions and disposals, raising finance, business valuations and employee ownership trusts (EOT).

Changes to current Coronavirus Business Interruption Loan Scheme (“CBILS”)

There have been many reports of businesses having issues in accessing much-needed funding through the CBILS facility. Issues have included demands from lenders for Personal Guarantees and being pushed towards more expensive “standard bank products” as opposed to CBILS where interest and fees are covered by the government for the first 12 months.

Under the revisions to the scheme we now understand that smaller businesses that have previously met the requirements for a commercial facility (i.e. non CBILS), will now have the opportunity to apply for Coronavirus Business Interruption Loan Scheme as insufficient security is not a requirement anymore.  Therefore, lenders no longer have to assess the possibility of other forms of finance ahead of CBILS which should increase both response times and access to the government backed scheme.

In addition, Personal Guarantees will not be required for applications of less than £250k and for applications above £250k, PG’s will be restricted to 20% of the funding sought.

Coronavirus Large Business Interruption Loan Scheme

Concerns had been raised that there are a significant number of businesses, contributing a great deal to the UK economy, that fell between the support of CBILS (which is only available to businesses with turnover of less than £45m) and the support available to large scale businesses with an investment grade credit rating (typically large plc’s).

To address these issues the Coronavirus Large Business Interruption Loan Scheme (CLBILS) has been launched which will enable businesses with an annual turnover of £45m-£500m to apply for an 80% government backed loan of up to £25m.

A key difference to note in comparison to the smaller business equivalent scheme is the business interruption payments which cover interest and fees for the first 12 months will not apply to CLBILS.

Whilst it is inevitable that there will still be businesses that can’t access these schemes, these revisions are very welcome enhancements to the package of measures the government have introduced to support business.

Our dedicated team of Corporate Finance professionals are on hand to give advice if your business needs to assess its funding options.

Our free initial meeting/consultation remains in place and can be facilitated remotely over video call.

Free initial meeting

Pete Wilmer

Senior Partner & Head of Corporate Finance, Sheffield

0114 266 7141