Coronavirus Financial Assistance – All You Need to Know about CBILS

By March 24, 2020 Insights
Covid 19 Assistance

Small businesses are facing uncertainty over their future. The Government’s coronavirus financial assistance packages are aimed at providing small businesses with a bit of reassurance and concrete financial help during these tough times. The Coronavirus Business Interruption Loan Scheme (CBILS) is one of the major packages companies can take advantage of during these tough times. What is the scheme about and who can use it?

What is CBILS?

CBILS is a financial loan scheme created by the Government and provided by the British Business Bank. The scheme provides businesses with coronavirus financial assistance, allowing businesses to apply for loans of up to £5 million.

The Bank will cover up to 80% of losses with no fees, with the first 12 months of the finance being interest-free. The loan is provided by over 40 accredited lenders, which are listed on the British Business Bank website. CBILS is available for businesses from 23 March 2020.

Under the scheme, a business will be able to seek a loan due to the backing of the Government against the outstanding facility balance. As mentioned, the loan will be interest-free for the business for the first 12 months. However, the company will remain liable for the capital repayment. The backing by the Government is for the lender and not the business – so you will be fully liable for repayment.

The different finance products available include things like overdrafts, asset finance facilities and term facilities. Finance terms can run up to six years.

Who is eligible for CBILS?

The scheme is aimed to provide coronavirus financial assistance for small businesses that don’t meet a lender’s normal lending requirements. The business in question might not be able to attract a fully commercial loan but they are still considered viable in the long-term.

In order to be eligible to apply for the loan, your business has to:

  • Be based in the UK in your business activity.
  • Have an annual turnover no more than £45 million.
  • Have a borrowing proposal which would be considered viable was it not for the COVID-19 pandemic and which will enable your business to trade out of any short- or medium-term difficulty.

Most industries are allowed to apply for the loan but exclusions include banks, building societies, insurers and reinsurers. Furthermore, the public sector and political or religious membership organisations are not eligible.

It’s also worth noting that self-employed people can apply for the CBILS. The conditions are similar so you need to have an annual turnover of up to £45 million and you must generate over 50% of this turnover from trading activity.

How to apply for the CBILS loan?

The loan should be applied directly via the lender’s website. As mentioned, the list is available on the British Business Bank website. Businesses are advised to talk to their current bank or lender first and only approach other banks if a loan can’t be secured through their current lender first.

You are also able to apply by calling the lender, but do note that banks are currently experiencing a lot of traffic and telephone lines might be busy.

If possible, consider the urgency for the loan. The Bank recommends you wait if you can to allow those businesses in greater urgency to sort out the loans first. Naturally, if you really require a cash injection then keep contacting the bank and speak with your accountant for more information.

What about bigger businesses?

If your company has a turnover of more than £45 million, you might be able to use the Bank of England’s Covid Corporate Financing Facility. This is a government promise to purchase short-term IOUs from companies to boost their cash flow. Eligible businesses must have a “genuine business” in the UK and contribute to the UK economy. Again, companies should apply through their current bank and they must request at least £1 million in funding. You can read more about the scheme here.

Other coronavirus financial assistance available for SMEs

CBILS is not the only scheme and financial instrument that can help small businesses at this difficult time. The Government launched a range of measures that can provide assistance and you can read about them on our previous blog post.

These measures include things like:

  • Temporary help with Statutory Sick Pay (SSP)
  • Faster access to Employment and Support Allowance for the self-employed
  • A 100% Business Rates retail discount for 12 months and £2.2 billion in funding through the Small Business Rate Relief scheme

As the situation develops, the Government will likely continue to update its approach and introduce further measures. We will keep you up to date with any important information.

How to get more help with your finances

These are not easy times for many small businesses. Not only has the Government asked businesses to close and work from home when possible, but also health concerns for you and your employees. On top of this, your business’ financial situation can be in jeopardy.

There is help out there and it’s important you start looking into it even if you don’t need immediate assistance. It is a good idea to discuss your finances with a professional accountant – they can provide you with tips on how to weather the storm.

At Devonshire Green, we want to support you through these troubling times. We have many years worth of experience in helping small business plan their finances and solve tricky business situations. Contact us today and let’s create a plan for your business.