The Coronavirus Business Interruption Loan Scheme

In our blog today we thought we would share information on the Coronavirus Business Interruption Loan Scheme which is now active.

No Personal Guarantees Required On Borrowing Under £250,000

It is heartening to see that significantly more businesses will have access to this scheme, rather than being forced down traditional lending routes, and the fact that no personal guarantees are required on borrowing under £250,000 is definitely a step in the right direction.

You can go to this link here at CBILS to read more about the scheme but also below are some of the key details:

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to smaller businesses (SMEs) across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

The scheme is a part of a wider package of government support for UK businesses and employees.

CBILS has been significantly expanded along with changes to the scheme’s features and eligibility criteria. The changes mean even more smaller businesses across the UK impacted by the coronavirus crisis can access the funding they need.

Importantly, access to the scheme has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. Insufficient security is no longer a condition to access the scheme.

This significantly increases the number of businesses eligible for the scheme. The expanded scheme will be operational with lenders from Monday 6 April 2020.

The borrower remains fully liable for the debt.

Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

• recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied;
• a Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility

Some Key Features

The maximum value of a facility provided under the scheme is £5 million, available on repayment terms of up to six years.

The scheme provides the lender with a government-backed, partial guarantee against the outstanding balance of the finance.

The borrower remains 100% liable for the debt.

The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges.

Accountancy Support Services

WHR Accountants are here to provide support to you and your business. If you need any help or advice please give us a call and speak to our team.