CBILS revamped and expanded to support UK business

Additional changes to the Coronavirus Business Interruption Loan Scheme (CBILS) have been announced, alongside news that the Treasury announced has only been able to approve 1,000 of the emergency loan enquiries it received.

“This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible,” Chancellor Rishi Sunak said in a government statement.

Previously, small businesses who could access financial support on commercial terms were ineligible for CBILS; now, any viable business that can demonstrate they have been affected by coronavirus are eligible for assistance.

Under CBILS’ expansion, these businesses can now benefit from the scheme, so long as they self-certify the impact coronavirus has had on them and they have a viable borrowing proposal.

Lenders are also unable to request personal guarantees on any loans under £250,000, but those with loans over this amount will have their recoveries capped at 20 percent of the outstanding CBILS facility amount.

Additionally, businesses having insufficient security will no longer bar them from accessing the scheme; however, where available, lenders still have the opportunity to take sufficient security to support CBILS loans.

“It is about time we throw SMEs a lifeline they can really hold onto, and ensure that they get immediate access to some much-needed cashflow to keep afloat,” Andrew Harding, chief executive, management accounting at the Association of International Certified Professional Accountants, said in a press release.

“They should not be caught between the banks and the government. Additionally, it is a nonsense in an environment where the Bank of England has now cut its base rate to 0.1 percent not to be able to access cheap money.”

The changes will be retroactively applied by lenders up to March 23. Lenders will also work to bring borrowers who used commercial facilities onto CBILS, so long as they meet the new CBILS criteria.

“Removing the need to be offered standard products first – with an interruption loan as an afterthought – marks a big step forward,” Mike Cherry, the national chairman of the Federation of Small Businesses, said in a press statement.

“So too is ensuring small businesses can qualify for an emergency loan application on the basis of one simple criterion: whether or not you’ve been negatively impacted by the spread of coronavirus is the only question that counts at this juncture.”

The British Business Bank has said that while viability assessment criteria has not changed, small loans could be determined by the lenders’ internal credit models.

Alongside these changes, Chancellor Rishi Sunak has warned banks against charging double-digit interest rates after the initial 12-month no-interest period.

Additionally, the new Coronavirus Large Business Interruption Loan Scheme (CLBILS) can provide government guarantees of 80 percent. In turn, banks will now be able to provide firms with an average turnover between £45m and £500m with a maximum loan of £25m.

More details on this large business scheme are due to be announced by the Chancellor mid-April.

In a statement, British Business Bank chief executive Keith Morgan said: “We have seen an incredible demand for CBILS since it launched, so opening up access to the scheme to even more smaller businesses across the UK will enable lenders to expand their support, deploying vital funding where it is most needed.”

CBILS remains closed to banks, insurers and reinsures, public-sector bodies, state-funded primary and secondary schools, and grant-funded higher education establishments.

Editor’s Note: This article has been updated as of 5:50pm on April 3, 2020.