How to apply for the UK CBILS

The Coronavirus Business Introduction Loan Scheme (CBILS) was announced in March 2020 to provide finance of up to £5 million to support smaller businesses across the UK. If your business has suffered cash flow problems as a result of the effects of the coronavirus outbreak – you are eligible to apply for the funding.

The scheme is available through a range of participating lenders such as banks. It is currently expected to run for six months from 23 March 2020, however, this is subject to change.

The facilities available under CBILS include a range of business finance products, such as:

Overdrafts
term loans
Asset Finance and
invoice finance.

CBILS provides lenders with a Government-backed guarantee covering 80% of the facility, aimed at encouraging them to agree to provide finance for struggling businesses, while the borrower remains 100% liable for the debt.

This article aims to offer an overview of CBILS, which businesses are eligible and how to apply for funding under the scheme.

Key features of CBILS

The key features of CBILS include the following:

A facility covering a range of types of funding providing up to £5 million per eligible business, repayable over a maximum term of six years.
A Government-backed 80% guarantee for the lender against the outstanding facility balance, which is subject to an overall cap by the lender.
Borrowers do not have to pay a guarantee fee
No up-front costs and lower initial payments for borrowers as the Government will make a Business Interruption Payment to cover the first 12 months’ interest and any lender-levied fees.
Repayment terms for invoice finance facilities and overdrafts of up to three years, while term loans and asset finance can be repaid over a term of up to six years.
Borrowers always remain 100% liable for the debt.

Which businesses are eligible for CBILS?

Eligible businesses include:

businesses from all sectors
with an annual turnover of less than £45 million
whose business activities are UK-based.
Sole traders and freelancers, Limited partnerships, body corporates, limited liability partnerships or other legal entities are eligible
The business activity must operate through a business bank account.
Applicants must generate more than 50% of their turnover from their trading activity.

Applicants must have a borrowing proposal that lenders would consider to be viable, were it not for the coronavirus pandemic. The lender must also believe that the provision of CBILS finance would enable the business to ‘trade out’ of any short-to-medium-term difficulties.