Support for businesses through the Coronavirus Business Interruption Loan Scheme (CBILS)
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, (via one of 40 accredited lending providers including most banks) launched on 23 March 2020. The scheme has been set up to provide access for small and medium-sized businesses to bank lending and overdrafts. It is aimed at businesses who are experiencing lost or deferred revenues, leading to disruption to their Cashflow.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The Government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free as the Government will cover the first 12 months of interest payments.
You are eligible for the scheme if:
Your business is UK based with turnover of no more than £45 million per year.
Have a borrowing proposal which, if not for the current coronavirus 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. Your business meets the other British Business Bank eligibility criteria.
- Your application must be for business purposes.
- Your business must generate more than 50% of its turnover from trading activity.
- Your CBILS-backed facility will be used to support businesses primarily trading in the UK.
- You wish to borrow up to a maximum of £5m. (Finance terms are up to six years for term loans and asset finance. For overdrafts and invoice finance facilities, terms will be up to three years).
Please note: If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.
The following trades and organisations are not eligible to apply: Banks, Building Societies, Insurers and Reinsurers (but not insurance brokers); The public sector including state funded primary and secondary schools; Employer, professional, religious or political membership organisation or trade unions.
No guarantee fee for SMEs to access the scheme.
Some lenders have
indicated they would not charge arrangement fees or early repayment charges to
SMEs borrowing under the scheme.
At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facitilites above £250,000, the lender must establish a lack or absence of security prior to business using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. The borrower always remains 100% liable for the debt.
The types of finance availble:
CBILS supports a wide range of finance facilities including:
How to access the scheme
The full rules of the scheme and the list of accedited lenders can be found at https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
You should contact your bank or lending provider as soon as possible to discuss your business plan with them. This will help your finance provider to act quickly. You will need to have your accounting affairs up to date to ensure you can provider the lender with current information.
If you have existing finance you may now wish to ask for a repayment holiday to help with your cashflow.
There is likely to be a big demand for these facilities once the scheme goes live and the advice is:
Consider applying via the lenders website in the first instance
Consider the urgency of your needs
Loan application process
Applications should be made to your usual bank or finance company and we can advise you on making the application. There will be administration and information to collect before you make the application.
Information likely to be required from your lender
Profit and loss forecast for the next 24/36 months.
Cashflow forecast for the next 24/36 months.
Latest management accounts.
Summary of why your business has been affected by the Coronavirus and the reasons why the trading performance will improve when restrictions are lifted.
The loan process typically involves:
Step 1: You submit an application (typically online);
Step 2: You will need your Standard Industrial Classification Code (SIC) code (this can be found on the Companies House website);
Step 3: An account manager reaches out to you to learn more about your business, collect documentation and find terms that suit your need.
Step 4: Underwriters review your application and make a decision. They may contact you or us if they have additional questions.
Step 5: You accept a loan offer and you will be fully funded.
As of 23 March 2020, some banks have not updated their websites or provided details of the Coronavirus Business Interruption Loan Scheme. Please keep your eye out for updates. More information can be found on the Government website.
VAT Payment Deferment
VAT Payments over the next three months will not be payable until 31 March 2021.
The deferment applies automatically to all businesses.
VAT returns will still need to be submitted on time and repayment claims will be processed as normal.
We would suggest you cancel your VAT direct debit with HMRC to ensure payment is not automatically taken.
PAYE Self Assessment and Corporation Tax Deferment
HMRC have set up a dedicated support line for businesses that are not able to pay their tax due to coronavirus.
For those of you unable to to pay due to coronavirus, HMRC will discuss your specific circumstance to explore:
- Agreeing an installment arrangement
- Suspending debt collection proceedings
- Cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately.
The number is 0800 0159 559 and their opening hours are Monday to Friday 8am to 4pm.