Chancellor of the Exchequer Rishi Sunak announced the CBILS amid the coronavirus pandemic and – to be eligible – businesses must be UK-based with an annual turnover of no more than £45m and have a borrowing proposal that, if it wasn’t for the current pandemic, would be considered viable by the lender, and for which, the lender believes the provision of finance will enable the business to trade out of any short to medium-term difficulty.
Bank trade body UK Finance CEO Stephen Jones said: “The banking and finance sector is committed and has the capacity to support viable businesses with their cash flow and investment needs.
“The CBILS is an important additional solution for situations where lenders are unable to support small-medium enterprises on normal terms that enables eligible banks and other finance providers to give help to businesses to manage through the cash flow pressures they may experience during this unprecedented period.
“In order to access the scheme, facilities of more than £250,000 require available security to be taken. Lenders are required to take security over assets because the Government guarantee of 80% of loan losses only covers residual losses on a bad debt after the security taken has been realised.
“The first 12 months of the loan is interest rate and fee free, and the residual rate for terms longer than 12 months will take into account the Government guarantee and security provided. For loans less than £250,000, the scheme requires banks follow their normal credit policies by taking security as appropriate.”
Busy phone lines
Criteria for Coronavirus Business Interruption Loan from British Business Bank:
Eligibility – the business must meet the eligibility criteria as set by the Government to be able to qualify and be able to apply.
Security – the lending is for businesses that do not have suitable security and would not be able to receive lending from their bank
Viability – the lending is for otherwise healthy businesses that are hit by short or medium-term problems caused by Covid-19 and where the lending will allow them to trade through this short or medium-term problem
Jones went on to say firms are constantly keeping websites updated with the latest information, which can answer customer queries.
He added: “For more detailed questions, there are a range of different ways to get in touch, including through online chat, social media and mobile and banking apps.
“As you will appreciate, phone lines are very busy at this time and we would encourage only those customers who are facing an immediate issue with their finances to call their provider in the first instance.”
A spokesperson for Lloyds Bank Commercial Banking said they wanted to help customers get the finance they needed during amid the Covid-19 pandemic.
The spokesperson added: “Since Monday 23 March, this could include the Coronavirus Business Interruption Loan Scheme (CBILS), if they do not have sufficient security.
“If a business is eligible for lending under our normal commercial terms then under the criteria set by the British Business Bank, we cannot provide them with this lending through CBILS.”
Personal guarantees
The spokesperson continued: “We estimate 90% of the CBILS loans we provide will be for less than £250,000 and we do not ask for personal guarantees for those loans.
“For the few cases above £250,000, guarantees may be sought but never on primary residences.”
The spokesperson emphasised Lloyds Banking Group was committed to helping its customers through any interruptions they face.
They added: “In January, we made a commitment to lend £18bn to businesses in 2020 and we expect to honour that during the year.
“At the beginning of the crisis, we committed a £2bn fund to provide additional fee-free lending to small-medium enterprises (up to £25m turnover) and capital repayment holidays for those worst affected.
“We stand ready to support British businesses through the coronavirus outbreak with the finance they need.”
