Coronavirus Business Interruption Loan Scheme (CBILS)

Coronavirus Business Interruption Loan Scheme (CBILS)

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Government Business Loans

Your guide to government loans for businesses

What is a Government Business Loan?

A Government Business Loan is a loan provided by a financial institution, which is backed by the Government. This means that the lender is protected against defaults on payments by the borrower, and therefore enables borrowers access to more funds due to the reduced risk taken on by the lender.

 

What Government Loans are Available to UK Businesses?

There are a number of Government Loans available to UK businesses.

To support UK businesses that have been negatively impacted by the COVID-19 outbreak, the government and the British Business Bank launched various Business Loan Schemes in spring 2020. These schemes are delivered by lenders accredited by the British Business Bank and are designed to enable businesses that have lost revenue and have had cash flow disrupted due to the pandemic, to receive financial support in order to survive the challenging period.

Below, we outline what types of loans are available to UK businesses, and provided details on how you can apply.

 

Coronavirus Business Interruption Loan Scheme (CBILS)

A CBILS loan allows UK businesses to access financial support of £50,001 up to £5 million, if they have been negatively impacted by COVID-19. This facility is for businesses that have a turnover of less than £45 million. The loan is government-backed, so the lender is guaranteed 80% of the loan for losses incurred by default. The borrower remains 100% liable for the loan.

  • Businesses can borrow up to 25% of annual turnover
  • The Government will pay the first 12 months of interest, and any lender-levied fees
  • There is no requirement for personal guarantees if the loan £250,000 or less
  • Businesses can receive multiple CBILS loans as long as the total borrowing is no more than 25% of annual turnover

Bounce Back Loan (BBLS)

The Bounce Back Loan Scheme is available to businesses impacted by COVID-19 that are looking for a smaller loan from £2,000 to £50,000, up to a maximum of 25% of annual turnover. The BBLS enables businesses to gain quicker access to financial support than the CBILS or CLBILS due to reduced underwriting checks. The lender receives a 100% government-backed guarantee. The borrower remains 100% liable for the debt.

  • The Government will pay the first 12 months of interest, and no capital repayments will need to be made in the first 12 months, so there is nothing to pay for the first year
  • The annual interest rate is fixed at 2.5% after year 1
  • Credit ratings (business or personal) won’t impact eligibility

 

Coronavirus Larger Business Interruption Loan Scheme (CLBILS)

The CLBILS Loan is designed to support mid-sized and larger UK businesses, with turnover of more than £45 million, who have disrupted cash flow and decreased or deferred revenue due to COVID-19. Through the CLBILS, a business can access finance of up to £200 million if it has been negatively impacted by the pandemic.

  • Businesses with turnover of more than £45 million but less than £250 million can apply for up to £25 million
  • Businesses with turnover of more than £250 million can apply for up to £50 million
  • Term of the loan can be between 3 months and 3 years
  • There is no requirement for personal guarantees if the loan £250,000 or less

 

How do I know if my business is eligible for the Government Coronavirus Scheme Loans?

Your business will be eligible to apply for the Coronavirus Government Loan Schemes if:

  • It is UK-based in its trading activity
  • There is a borrowing proposal which a lender would consider would it not be for the current pandemic
  • You can self-certify that your business has been adversely affected by COVID-19
  • The business was established prior to 1st March 2020 (Bounce Back Loan only)

Your business will not be eligible if it is:

  • A bank, an insurer or a reinsurer
  • A public-sector organisation
  • A state-funded primary or secondary school

 

Government Start-Up Loan

The Government Start Up Loan is a government-backed personal loan which is available to individuals in the UK who are looking to start or grow their business.  These loans are designed to support business owners that have been unable to secure loans from traditional lenders, such as the high street banks.

The Loan is made to the individual for business purposes rather than to the business, and is unsecured which means no guarantees or assets are required to secure the loan.

  • Borrow £500 to £25,000
  • 1 to 5 year repayment terms
  • Fixed interest rate of 6% per annum
  • Applicants receive 12 months of free mentoring

Am I eligible for a Government Start Up Loan?

You are eligible to apply for the Start Up Loan if:

  • You’re 18 years of age or older
  • You’re a current UK resident and you have the right to work in the UK
  • Your business is based in the UK
  • You’re starting a business, or have been trading for up to 2 years
  • Your business type and loan purpose meet the scheme’s eligibility terms

 

Can I receive multiple Government Loans?

You are able to receive multiple CBILS loans, as long as the total borrowing is no more than 25% of annual turnover.

You are not able to receive a BBLS as well as a CBILS or CLBILS. If you have received a BBL and wish to apply for a CBILS or a CLBILS, you will be required to settle the BBLS with the CBILS or CLBILS loan proceeds.

 

How can I access a Government Loan?

Businesses do not need to contact the British Business Bank directly to apply for a Government Loan. You can apply for a Loan by submitting an application to a lender.

You will be required to demonstrate that you fulfil the eligibility and criteria set by the British Business Bank and the lender. The documentation required is dependent on the finance provider, however, you can usually expect to provide business bank statements, financial accounts and VAT returns.

Here at Newable Finance, we have a team of Finance Specialists who are able to navigate you through the application process. Find out how Newable can help with your Government Loan application by calling us today 0208 142 4385, or by completing our enquiry form.

 

When do I need to apply for a Government Loan?

The end-date for the Coronavirus Schemes is 31st January; therefore, the application must be submitted to the lender before this date. There is currently no end-date for the Start-Up Loan.

 

What other types of finance could I apply for?

There are many different business finance facilities that are not Government-backed which you can apply for, facilities include:

 

Whatever your requirements are, whether it is government-backed loan or a standard finance product, we take the stress and hassle out of finding the right finance solution for your business.

Get started now, and one of our Finance Specialists will give you a call back to discuss your requirements in further detail!

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