Whilst we welcomed the introduction of the Coronavirus Business Interruption Loan Scheme (CBILS) to provide funding support to businesses during the COVID-19 crisis, we were concerned at the accessibility of the scheme for all SMEs requiring assistance.
Initially to qualify for CBILS, annual turnover could not exceed £45million and the maximum loan was capped at £5million although last week it was announced that these limits were increasing to £500million and £25million respectively.
Furthermore, the scheme initially appeared onerous in respect of the personal guarantee requirements from business owners. However we are delighted that this has been relaxed with the following amendments to the scheme:
New Features to CBILS
Personal guarantees for facilities above £250,000 – Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied (i.e. PG’s are limited to the portion of the loan not covered by the Government’s 80% commitment);
Principal Private Residence (PPR) – PPR cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility;
Interest and fees paid by Government for 12 months – The Government will make a Business Interruption Payment to cover the first 12 months of interest payments. Banks have been instructed to waive arrangement fees and this has now been extended to cover early settlement fees so that that there is no cost to the business at all if the loan is repaid within 12 months;
No personal guarantees for facilities under £250,000– Personal guarantees of any form cannot be taken under the scheme for any facilities below £250,000;
Security – For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment. However, where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility;
Self-certification – Businesses can self-certify they have been impacted by COVID-19; and
Retrospective changes – these changes should be retrospectively applied by lenders for any CBILS facilities offered since 23 March 2020. For any commercial (non-CBILS) facilities offered since the same date, providing the borrower meets the CBILS eligibility criteria, lenders have been asked to bring these facilities onto CBILS wherever possible and changes retrospectively applied as necessary.
From our discussions with lenders, a large number of these that are not in the original batch of 40 accredited participants, are now in the process of applying for membership to the scheme. These include “debt funds” with interesting debt products providing an alternative to the options available from the high street banks.
How we can help
Even with those welcomed adjustments, COVID-19 emergency loans are still a lot less straight forward to secure than has been presented in the media. Successful applications for a CBILS loan will require a strong business case set out in a detailed business plan supported by a robust and fully integrated monthly phased profit, cashflow and balance sheet forecast demonstrating the viability of the business.
The increasing number of lenders participating in the scheme should open up the choice of debt products available and it is important to understand the entire landscape of lenders in selecting the optimal debt product for individual requirements.
If you want to discuss how we can assist you in the preparation of you CBILS application, please do not hesitate to contact us.
Whilst we welcomed the introduction of the Coronavirus Business Interruption Loan Scheme (CBILS) to provide funding support to businesses during the COVID-19 crisis, we were concerned at the accessibility of the scheme for all SMEs requiring assistance.
Initially to qualify for CBILS, annual turnover could not exceed £45million and the maximum loan was capped at £5million although last week it was announced that these limits were increasing to £500million and £25million respectively.
Furthermore, the scheme initially appeared onerous in respect of the personal guarantee requirements from business owners. However we are delighted that this has been relaxed with the following amendments to the scheme:
New Features to CBILS
Personal guarantees for facilities above £250,000 – Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied (i.e. PG’s are limited to the portion of the loan not covered by the Government’s 80% commitment);
Principal Private Residence (PPR) – PPR cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility;
Interest and fees paid by Government for 12 months – The Government will make a Business Interruption Payment to cover the first 12 months of interest payments. Banks have been instructed to waive arrangement fees and this has now been extended to cover early settlement fees so that that there is no cost to the business at all if the loan is repaid within 12 months;
No personal guarantees for facilities under £250,000– Personal guarantees of any form cannot be taken under the scheme for any facilities below £250,000;
Security – For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment. However, where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility;
Self-certification – Businesses can self-certify they have been impacted by COVID-19; and
Retrospective changes – these changes should be retrospectively applied by lenders for any CBILS facilities offered since 23 March 2020. For any commercial (non-CBILS) facilities offered since the same date, providing the borrower meets the CBILS eligibility criteria, lenders have been asked to bring these facilities onto CBILS wherever possible and changes retrospectively applied as necessary.
From our discussions with lenders, a large number of these that are not in the original batch of 40 accredited participants, are now in the process of applying for membership to the scheme. These include “debt funds” with interesting debt products providing an alternative to the options available from the high street banks.
How we can help
Even with those welcomed adjustments, COVID-19 emergency loans are still a lot less straight forward to secure than has been presented in the media. Successful applications for a CBILS loan will require a strong business case set out in a detailed business plan supported by a robust and fully integrated monthly phased profit, cashflow and balance sheet forecast demonstrating the viability of the business.
The increasing number of lenders participating in the scheme should open up the choice of debt products available and it is important to understand the entire landscape of lenders in selecting the optimal debt product for individual requirements.
If you want to discuss how we can assist you in the preparation of you CBILS application, please do not hesitate to contact us.
Following strong criticism of a clear ‘gap’ in the emergency loan schemes provided by the Government for businesses suffering from the COVID-19 crisis, the Chancellor Rishi Sunak announced yesterday a new emergency loans package for larger businesses.
The Coronavirus Business Interruption Loan Scheme (CBILS) for SMEs with a turnover under £45m and the Covid Corporate Financing Faculty (CCFF) designed for large investment-grade companies clearly excluded mid-sized businesses from COVID-19 funding support. The new scheme called Coronavirus Large Business Interruption Loan Scheme (CLBILS) will enable companies with a turnover between £45m and £500m to access government-backed loans of up to £25 million.
Requirements of the scheme are similar to the CBILS for SMEs and unfortunately it is a lot less straight forward to secure than suggested in recent government announcements. However, we have a vast amount of experience in supporting business secure these types loans.
Further details of the scheme for mid-sized businesses are still to be announced and we are monitoring closely the Government’s initiatives on this matter.
Scheme Highlights
There is no guarantee that larger businesses will be provided with access to the scheme;
Intended for facilities of up to £25,000,000;
The loans will not be interest-free but at commercial rates of interest;
The scheme provides a Government guarantee of up to 80% to lenders to enable loans; and
To be eligible your business must be UK based with annual turnover between £45m and £500m
How we can help
Applications to the CLBILS requires a strong business case supported with robust business plan and financial forecasts. We have an in-depth knowledge of the market, products and funds and the process and requirement of the lenders to determine whether a business plan demonstrates long term viability and would be successful in its application to CLBILS. For more than 28 years we have provided capital and debt advice to businesses, shareholders, management teams and major financial investors, consistently demonstrating our ability to structure the most appropriate funding package for our clients throughout the economic cycle, including three recessions.
If you want to discuss how we can assist you with your CLBILS application, please do not hesitate to contact us.
Following strong criticism of a clear ‘gap’ in the emergency loan schemes provided by the Government for businesses suffering from the COVID-19 crisis, the Chancellor Rishi Sunak announced yesterday a new emergency loans package for larger businesses.
The Coronavirus Business Interruption Loan Scheme (CBILS) for SMEs with a turnover under £45m and the Covid Corporate Financing Faculty (CCFF) designed for large investment-grade companies clearly excluded mid-sized businesses from COVID-19 funding support. The new scheme called Coronavirus Large Business Interruption Loan Scheme (CLBILS) will enable companies with a turnover between £45m and £500m to access government-backed loans of up to £25 million.
Requirements of the scheme are similar to the CBILS for SMEs and unfortunately it is a lot less straight forward to secure than suggested in recent government announcements. However, we have a vast amount of experience in supporting business secure these types loans.
Further details of the scheme for mid-sized businesses are still to be announced and we are monitoring closely the Government’s initiatives on this matter.
Scheme Highlights
There is no guarantee that larger businesses will be provided with access to the scheme;
Intended for facilities of up to £25,000,000;
The loans will not be interest-free but at commercial rates of interest;
The scheme provides a Government guarantee of up to 80% to lenders to enable loans; and
To be eligible your business must be UK based with annual turnover between £45m and £500m
How we can help
Applications to the CLBILS requires a strong business case supported with robust business plan and financial forecasts. We have an in-depth knowledge of the market, products and funds and the process and requirement of the lenders to determine whether a business plan demonstrates long term viability and would be successful in its application to CLBILS. For more than 28 years we have provided capital and debt advice to businesses, shareholders, management teams and major financial investors, consistently demonstrating our ability to structure the most appropriate funding package for our clients throughout the economic cycle, including three recessions.
If you want to discuss how we can assist you with your CLBILS application, please do not hesitate to contact us.
