How to apply for the Coronavirus Business Interruption Loan Scheme (CBILS)

The Chancellor, Rishi Sunak, announced the Coronavirus Business Interruption Loan Scheme (CBILS) at the end of March 2020. Through the CBILS, you can access loans and other types of finance of up to £5 million.

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What is the Coronavirus Business Interruption Loan Scheme (CBILS)?

The CBILS is designed to help small- and medium-sized businesses affected by the coronavirus pandemic access loans and other types of finance, including overdrafts and invoice finance. It’s a loan, not a grant, which means you will need to repay the debt – your business is liable for all of the repayments.

The CBILS is operated through the British Business Bank and its accredited lenders. Through the CBILS:

• you can access up to £5 million of loans and other finance, including overdrafts and invoice finance
• the government guarantees 80 per cent of the finance to the lender
• the government pays interest and any fees for the first 12 months
• there are terms of up to three years (for overdrafts and invoice finance) and of up to six years (for loans and asset finance)

The CBILS launched at the end of March 2020, but the application process attracted criticism throughout April, leading Rishi Sunak to ask banks “to support small and medium-sized enterprises in any way they can”. The suggested support included making sure interest rates are reasonable and making sure businesses are aware of the benefits of the government guarantee.

The CBILS is different to the Bounce Back Loan Scheme (BBLS). You can access more money through the CBILS, as well as alternative types of finance. But the government guarantees 80 per cent of the finance (rather than 100 per cent through the BBLS), and your lender will ask for more information to make sure your business would be viable if it wasn’t for coronavirus.

Here’s how to apply for the CBILS, including the information you’ll need to give your bank.

How to apply for the Coronavirus Business Interruption Loan Scheme (CBILS)

1. Am I eligible for the CBILS?

Your business needs to:

• be based in the UK
• have an annual turnover of up to £45 million
• have a borrowing proposal the lender would consider viable, if it wasn’t for coronavirus
• have been adversely impacted by coronavirus (you can self-certify for this)
• not have been classed as a ‘business in difficulty’ on 31 December 2019, if applying to borrow £30,000 or more

2. Find a lender who’s participating in the CBILS

There are over 40 lenders taking part in the CBILS. These include high-street banks like Barclays and Natwest, as well as challengers like Atom and Starling Bank.

You could approach your existing bank first to see if they’re taking part. Most providers will have details of the scheme on their website (the British Business Bank says phone lines will be very busy, so banks will struggle to handle offline queries).

The types of finance available will vary between lenders, as will the amount available, so make sure you research your options properly.

3. Your lender will ask for information

You’ll need to let the lender know how much you’d like to borrow, as well as why you need to borrow the money (the business purpose) and the time period you’d like to pay it back in.

The lender may ask for supporting documents, like your:

• management accounts
• cash flow forecast
• business plan
• historic accounts
• details of assets

You might not need to provide all of this information if you’re asking for a small loan – gov.uk says the process might be automated in that case.

But for larger loans, providing all the information requested should help speed up the application process. For example, think about how to prove that your business would be viable if it wasn’t for coronavirus, and what exactly you need the money for.

4. Your lender will make a decision

The lender will work out whether the loan you’ve applied for is right for your business.

They can’t ask for a personal guarantee of any form for finance below £250,000 (a personal guarantee means that you could be personally liable for the loan if your business defaults on payments).

Above £250,000, the personal guarantee is capped at 20 per cent of the balance after your assets have been applied, and it excludes your main residence.

While the government can guarantee 80 per cent of the loan, your business is still 100 per cent liable for all of the loan repayments. This means you should be sure that you can repay the debt in the future.

If your lender turns you down, you can still apply with a different lender.

This article is intended as a guide only. Before making any decisions on borrowing money, you should seek independent financial advice.

If you're thinking of applying for the CBILS, Swoop can help simplify and speed up the application process. Visit Swoop’s website and enter a few key details about your business to get started.

Have you applied for the CBILS? Let us know how the process went in the comments below.