Government Backed SME Lending | Coronavirus Business Interruption Loan Scheme
We are all navigating unchartered waters as business and society faces up to the impact of COVID-19. We very much hope you and your loved ones remain in good health.
Please be assured that Fieldfisher is continuing to work with clients to navigate COVID-19 related issues and on business as usual needs. Do get in touch with us if you would like to chat anything through.
CBILS is available as of today. In a nutshell, CBILS is a government scheme to ensure the availability of credit to SMEs during the Covid-19 pandemic – particularly smaller SMEs – delivered by the government-backed British Business Bank guaranteeing loans to SMEs and by HM Government covering the first 12 months of interest of loans drawn under the scheme. Information contained in this alerter is given as at the time of writing.
Speed read
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CBILS covers term facilities, overdrafts, invoice finance facilities and asset finance facilities
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The maximum value of facility provided under CBILS will be £5 million
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No fee for borrowers to access the scheme
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Eligibility: be UK-based business; turnover ≤ £45m; operate in a sector that is not ineligible or restricted; be otherwise unable to meet a lender's normal lending requirements for a fully commercial financing
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Ineligible and restricted sectors include banks and insurers (amongst others).
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To apply borrowers should approach one of the accredited lenders through their website
A little more detail
About CBILS
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CBILS is designed to be offer government-backed support to private sector lending. Moreover, the scheme works with over 40 'accredited lenders' who provide the financing, however, that provision of credit is then supported by HM Government in the form of a guarantee to the accredited lender of the borrower's obligations (up to a value of 80% of the facility offered). Decision-making on the provision of credit and eligibility for CBILS rests fully with the accredited lender.
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The accredited lender (to whom the borrower applies for finance) receives a guarantee from the British Business Bank (which is backed by HM Government) up to the value of 80% of the facility provided.
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The borrower remains liable for payments and repayments under the financing but the credit support offered enables lenders to provide credit where they would otherwise be unable to or be constrained.
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HM Government will "cover" the first 12 months of interest payments such that all borrowers will be entitled to a "Business Interruption Payment" to cover interest and fees for a period of 12 months from the date of drawdown (subject to a €800,000 cap for all borrowers save a number in particular sectors, including fisheries, aquaculture and agriculture to which lower caps apply).
Eligibility
A borrower must be UK-based with a turnover not exceeding £45m per annum.
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The borrower must not have received State aid beyond €200,000 over the current previous two financial years.
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The borrower must be unable to meet a lender's normal lending requirements for a fully commercial financing (e.g., for lack of an adequate security package) but be otherwise financial viable in the longer term. In other words, if finance can be offered on the ordinary day-to-day business terms of the lender, CBILS will not be needed or indeed used.
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CBILS is unavailable to those in "ineligible" or "restricted" sectors: see the British Business Bank website, but in broad terms (as at the date of writing) the following are ineligible: banks, building societies, insurers and reinsurers (but not insurance brokers); public sector (e.g., schools); employer, professional, religious or political membership organisations and trade unions.
Types of financings covered
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CBILS covers a wide range of business financing products, including:
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term facilities
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overdrafts
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invoice finance facilities
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asset finance facilities
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Finance terms covered are from 3 months to 10 years for term loans and asset finance and up to a maximum of 3 years for revolving credit facilities and invoice finance.
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The maximum facility value covered under CBILS will be £5 million.
If you would like to know more about CBILS, whether as an accredited lender (for whom there is now an accelerated accreditation process) or as a borrower, do get in touch with a member of the team below.
Dougall Molson | Partner
Oliver Abel-Smith | Partner
Michelle Schean | Partner
Robin Spender | Partner
Jayne Backett | Partner
Simon Lafferty | Senior Associate