Page 17 - BOSS Today Issue 47

DOWN TO BUSINESS BOSS Today #47

CORONAVIRUS BUSINESS

INTERRUPTION LOAN

SCHEME (CBILS)

A more detailed look at the Coronavirus Business Interruption Loan Scheme (CBILS), who it might apply to and
advice on how to get access to it.

UK wide scheme designed to help Two simple examples to depict how Precise conditions and access may vary
A businesses affected by coronavirus liability falls on debt following defaulted between banks but, on a practical level,
to access loans of up to £5 million. The loans: businesses are advised to approach banks
original scheme made allowance for loans that they have an on-going relationship
of up to £5 million, available to business Example 1: with in the first instance. It may just take
with a turnover up to £45 million. The £250,000 loan over a five year period. too long to get through to a new bank and
scheme will be interest free for up to 12 Company fails after four years. provide them with the information they
months and be fee free. An expansion £50,000 of loan already repaid. will need to make an informed decision on
has been announced so that firms with a £200,000 outstanding. your loan.
turnover between £45 million and £500 £100,000 secured from company assets.
million can access Government-backed £100,000 outstanding. To get access to CBILS it will be crucial to
loans of up to £25 million. satisfy the following criteria:
The scheme has been set up with the It is this outstanding liability that is
intention of providing financial support split between Government (80%) and n Was the business viable before the
to small and medium sized businesses the lending bank (20%). Government onset of COVID?
(SMEs) that are losing revenue, and £80,000, bank £20,000. n Is the business impacted now (to a point
seeing cashflow disrupted, as a result of where it falls outside normal lending
the COVID-19 outbreak. Example 2: criteria but with support will be able to
Visit the British Business Bank for more £500,000 loan over a five year period. trade through/beyond the crisis)?
details on how the scheme works. Company fails after four years.
Please note that the scheme encourages £100,000 of loan already repaid. If not, it is likely that the bank will either
lending as the Government is providing £400,000 outstanding. refuse to lend or push towards normal
security to the banks of up to 80% of the £200,000 secured from company assets. lending procedures.
outstanding debt on the loan. However, £200,000 outstanding. This is a new scheme and setting it up
the borrower always remains 100% liable has been a huge task, banks have been
for the loan. That said, at least nine of the Personal guarantee of 20% of outstanding managing learning and implementing the
main UK banks (Barclays, HSBC, Lloyds debt (as it is a loan over £250,000) scheme whilst dealing with a massive
Banking Group, Royal Bank of Scotland, is £40,000. £160,000 outstanding. increase in enquiries and limitations
Nat West, Ulster Bank, Santander, Metro Government (80%) £128,000, imposed by branch closures and staff
Bank and Virgin) have now removed bank (20%) £32,000. shortages as a result of coronavirus.
personal guarantee requirements for
loans up to £250,000.

17