Update to Coronovirus Business Interruption Loan Scheme (“CBILS”)

Changes to the terms of CBILS

In response to feedback from the business and banking communities that the financial support envisaged under CBILS is not getting through to SMEs, the UK Treasury has announced changes to the way the Government backed loan scheme should be approached by lenders.

The key changes from a business owner’s perspective are:

  • For financing facilities of less than £250,000, a lender will not ask for a personal guarantee
  • For financing facilities of over £250,000, personal guarantees may be requested, however these will be limited to 20% of the net loss from any loan after taking account of the proceeds of liquidation (but before the government guarantee)
  • If a personal guarantee is taken, it cannot be secured against the guarantor’s principal home
  • Lenders are NOT required to demonstrate a borrower’s ability to access funding under normal commercial terms
  • Insufficient security is no longer a pre-requisite for accessing the CBILS scheme

The expanded scheme will be operational from Monday 6th April 2020 and the conditions will apply to all CBILS facilities, including those that have been written since 23 March 2020.

Therefore, business owners who have accessed the CBILS scheme and given a personal guarantee as security for a facility of less than £250,000 should contact their lender.

The following remain fundamental features of CBILS:

  • The underlying viability of the company were it not for COVID-19
  • The requirement of the company to borrow having arisen as a result of disruption from COVID-19
  • The company remaining liable to repay 100% of the amounts borrowed

Coronavirus Large Business Interruption Loan Scheme (“CLBILS”)

A further announcement was made by the Treasury introducing a loan guarantee scheme for medium and large companies, defined as those with turnover of between £45m and £500m, who had previously been unable to access Government backed loans.

The details of this scheme have not yet been released, however we understand that it will be available for loans of up to £25m.

We will bring you further details of this scheme once they are announced.

We have revised our summary document of the COVID-19 Government support measures to reflect these updates. You can find the revised version here.