The Coronavirus Business Interruption Loan Scheme (CBILS) was introduced to support small- and medium-sized businesses severely impacted by the economic effects of COVID-19.

How does the Coronavirus Business Interruption Loan Scheme (CBILS) work?

The UK government hope to use the scheme to give confidence to lenders financing eligible businesses, by acting as a guarantor for 80% of a loan up to £5 million. The scheme is backed by the government’s British Business Bank.

Who is eligible for a Business Interruption loan?

In order to be eligible for the Business Interruption Loan you must;

• have a UK-based business
• have an annual turnover no greater than £45 million
• have a borrowing proposal which a lender would consider viable (even without the COVID-19 crisis)
• and you must also self-certify that your business has been negatively affected by COVID-19

However, some businesses say they have been turned away for the Coronavirus Business Interruption Loan and pointed towards standard commercial loans instead.

Business secretary, Alok Sharma said it was “completely unacceptable” for banks to turn away struggling businesses during this time. He promised to work with the government to come up with additional measures to help those businesses struggling to access support.

A number of applications for CBILS have already been made and approved, with funds ready to draw down. Despite the CBILS scheme, the loan terms available vary between lenders.

A summary of CBILS loans available from high street banks

• NatWest and RBS are offering loans under CBILS for between £5k and £5 million, for terms up to 6 years. Lending is made under existing loan products, with the option of a 12 month capital repayment holiday.
• HSBC are offering CBILS to existing customers. In addition to a 12 month capital repayment holiday their rates vary depending on the size of the loan, and length of the loan period. The good news is that there are no penalties for repaying the loan early.
• Lloyds are only offering a 6 month holiday on capital repayments. Lending is also restricted to sole traders or general partnerships requesting loan of more than £25,000, or of more than £10,000 for limited companies, LLCs or LLPs.
• Barclays are currently offering loans between £25,001 and £5 million, but say they will be offering loans starting at £1,000 from early May.
• Santander have supplied very limited information about the lending available under CBILS, and sadly, we have yet to hear any feedback as to what’s on offer.

18% of SMEs may not survive past four months

After surveying 13,000 SMEs the Corporate Finance Network found that around 800,000 businesses are concerned they won’t get the cash they need to survive for the next four months.

Similarly, research from productivity organisation Be the Business found that 39% of SMEs have already closed temporarily, and 7% have shut permanently as a result of the crisis. A further 23% are considering redundancies, though the government hope to stem this with the availability of the Coronavirus Job Retention Scheme.

• Find out what financial help is available for SME’s affected by coronavirus>

Self-employed workers face the same struggles

The same could be true for the self-employed. Despite the government stepping in to offer 80% of earnings to help self-employed people keep going, there will be a delay in this becoming available. Though the help will be backdated, this does leave many with serious cash flow issues.

For those who are newly self-employed and have not yet submitted a tax return, the Self-Employed Income Support Scheme isn’t open. Instead, anyone in this situation will need to explore applying for Universal Credit or other available options.

Has your business been negatively affected by the crisis? Have you or anyone you know struggled to get financial support or emergency loans? Please share your thoughts below, or join our Facebook group for small businesses.