How to get a Government Coronavirus Business Interruption Loan

Information last updated: 20:00, 3 April 2020

The Coronavirus Business Interruption Loan Scheme (CBILS) is now open for applications. 

In this post, we explain who’s eligible and what you can get.

What is the Coronavirus Business Interruption Loan Scheme?
Are you eligible for the Coronavirus Business Interruption Loan Scheme?
What types of finance can you get through this Scheme?
How much can you borrow through this Scheme?
How much interest or other fees will you have to pay?
Why has the Government launched this Scheme?
How do you apply to the Coronavirus Business Interruption Scheme?
Do you have to give a personal guarantee to get a loan?
What happens if a lender turns you down? Can you re-apply?

What is the Coronavirus Business Interruption Loan Scheme?

The Coronavirus Business Interruption Loan Scheme was announced by the Chancellor during the 2020 Budget. 

The Scheme provides finance for small businesses in the UK. In particular, for businesses which have or will have their cash flow disrupted by lost or late income due to the coronavirus outbreak.

Are you eligible for the Coronavirus Business Interruption Loan Scheme?

To be eligible to apply through this Scheme, your business must:

• be based in the UK
• have an annual turnover of no more than £45 million
  (If your business has a turnover of between £45 million and £500 million, instead you can apply to the Coronavirus Large Business Interruption Loan Scheme.)

To be eligible to get finance through this Scheme, your lender must:

• confirm that based on your proposal, if it were not for the coronavirus disruption, you’d have a viable business that meets the lender’s normal lending requirements, and
• believe that with the finance you get from the Scheme, you’ll be able to stay in business and continue trading in the short- or medium-term

If you’re not sure if your lender would decide you’re eligible, you can apply anyway. 

From 2 April 2020, this Scheme is open to small businesses with cash flow problems who previously would not have been eligible because they met the requirements for standard commercial lending. So if you were previously turned down by a lender for a Coronavirus Business Interruption Loan, you could ask the lender again.

For more about who’s eligible and what’s available, visit the British Business Bank (BBB). The BBB is administering the Scheme on behalf of the Government.

What types of finance can you get through this Scheme?

• Fixed-term loans with terms of up to 6 years
• Asset finance with terms of up to 6 years
• Overdrafts with term of up to 3 years
• Invoice finance with term of up to 3 years

How much can you borrow through this Scheme?

Eligible businesses can get up to £5 million in finance: 

• For up £250,000…
  If lenders are willing to, they’re allowed to give you unsecured finance of up to £250,000 under this Scheme.
• For £250,000 to £5 million…
  For larger amounts, the lender must establish that you can’t provide security before they lend to you on this Scheme. For example, if you have a sound proposal for why you’re borrowing and a robust business plan but you don’t currently have adequate security to meet a lender’s normal requirements, then they’ll consider lending to you on this Scheme.

Remember, if a lender can offer finance to you on their normal terms without the Scheme, they will.

How much interest or other fees will you have to pay?

There are no upfront costs and your first year of repayments will be lower. 

This is because the Government will pay fees the lender charges, such as to arrange your finance. The Government will also cover your first 12 months of interest payments.

You’ll still repay the full amount you borrow and if the term is more than 12 months, you’ll pay the interest after that.

You should check with your lender if there are any other fees you might have to pay.

Why has the Government launched this Scheme?

Generally, lenders have a strict set of criteria they use to decide whether to offer credit to businesses. In this coronavirus emergency situation, the Government wants to help small businesses so they’re giving selected lenders a guarantee on 80% of the money they lend, up to an overall cap per lender.

As the borrower, your business is still 100% liable for the debt, it’s just that the Government is helping to turn your lender’s ‘no’ into a ‘yes’.

How do you apply to the Coronavirus Business Interruption Loan Scheme?

You need to apply directly to one of more than 40 participating lenders. The lender will make the final decision.

Unfortunately the British Business Bank has not yet accredited any new lenders. We at Tide have lobbied hard to be allowed to participate and the BBB has now confirmed that new lenders will be able to join.

We’re working hard to be accredited as quickly as possible. If you’d like to be among the first to know as soon as we’re able to offer finance under this Scheme, join our Coronavirus mailing group.

Do you have to give a personal guarantee to get a loan?

If the amount you’re borrowing is less than £250,000, no, you won’t have to give a personal guarantee.

For finance of over £250,000, lenders might require a personal guarantee but this can’t be your home (the ‘Principal Private Residence’). And if you couldn’t pay back what you owe, the lender may only recover a maximum of 20% of the amount you still owe after they’ve taken into account the proceeds made from selling your business assets. This must all be set out in the contract when you agree to the lender’s terms.

What happens if a lender turns you down? Can you re-apply?

Yes. The lender you apply to has the authority to decide whether to offer you finance. If one lender turns you down, you can still approach other lenders accredited by the Scheme.

From 2 April 2020, this Scheme is open to small businesses with cash flow problems who previously would not have been eligible because they met the requirements for standard commercial lending. So if you were previously turned down by a lender for a Coronavirus Business Interruption Loan, you could ask the lender again.

Have your say

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Photo by Chris Liverani on Unsplash