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Who qualifies for the Coronavirus Business Interruption Loan Scheme?

View profile for Chris Willison
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The Coronavirus Business Interruption Loan Scheme (CBIL Scheme) was announced by the chancellor on 11 March and is available to businesses with a turnover of up to £45 million.

It aims to support those SME businesses that were trading successfully before COVID-19 but which may now experience lost or deferred revenues, or disruptions to their cashflow as a result of the current disruption, and those businesses whose growth requirements cannot be supported under normal bank lending criteria.

Where lenders can provide finance to a business under their normal criteria and pricing, this is still the route to access finance for SMEs. If a lender is unable to extend finance under its normal criteria, then it will look at a business’ eligibility under the CBIL Scheme.

In short, the scheme is:

  • A borrowing facility to provide cashflow support to SME businesses experiencing lost or deferred revenues, or disruptions to their cashflow due to COVID-19 or for funding for investment when lenders cannot support a finance application under normal criteria. 
  • Provided as a loan, overdraft, invoice finance facility or asset finance facility.
  • Available for products with a maximum term of six years (three years for invoice finance and overdraft facilities).
  • Accessed through lenders if they are accredited and available on lending up to £5 million.
  • Due to go live in most cases from the week commencing 23 March 2020.
  • Open to eligible SMEs which are:
    • > UK based, with sales or turnover of no more than £45 million per annum
    • > Operate within any business sector (different terms will apply for a small number of sectors, including agriculture, aquaculture and transport.
    • > Have a sound borrowing proposition and are viable (notwithstanding short-term disruption) but are unable to meet the lenders’ normal criteria. 

The government will provide a grant payment to SMEs to cover the interest and initial fees levied by the lender (e.g. arrangement fees) in the first twelve months so that the SME does not have to cover these. 

Security, including personal guarantees, may be required and all a borrower's available assets are required to be pledged for facilities over £250,000 (except a charge will not be taken over a borrower’s primary residential property).

If you require our guidance on this subject, please do get in touch.

This article represents our understanding of the law in England and Wales as at 25 March 2020. Its contents are not intended to serve as legal advice and should not be considered as a substitute for taking legal advice.