The Coronavirus Large Business Interruption Loan Scheme
Updated 30 September 2020: the Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides funding support for businesses with annual turnover of more than £45m, if certain eligibility criteria are met. Access to the scheme was extended in September.
|OFFICIAL GUIDANCE: Coronavirus Large Business Interruption Loan Scheme|
What is it and how can I get hold of the money?
CLBILS is designed to provide lenders with a government-backed guarantee of 80%, to offer facilities to viable businesses with annual turnover of £45m or more, that have seen their cashflow disrupted as a result of COVID-19.
UPDATE September: CBILS is open for new applications until 30 November 2020.
Key features of the scheme
- Up to £25m facilities for businesses with annual turnover from £45m to £250m.
- Up to £50m facilities for businesses with annual turnover over £250m.
- UPDATE 19 May: from 26 May, larger businesses will benefit from loans up to the lower of 25% of turnover, or £200m. Additional restrictions will apply (see Eligibility and additional features, below).
- Facilities: term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance.
- Repayment terms: up to three years for all facilities.
- Personal guarantees: no personal guarantees for facilities under £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20% of losses after all other recoveries have been applied.
- 80% guarantee: the scheme provides the lender (i.e. the bank or alternative lender) with a government-backed, partial guarantee (80%) against the outstanding facility balance (and interest and lender fees), subject to an overall cap per lender.
- The borrower always remains 100% liable for repayment of the debt.
- If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
Eligibility and additional features
Businesses would be wise to seek advice from their ICAEW Chartered Accountant or business adviser when applying for funds.
Business size: a company must be UK based in its business activity and have annual turnover of over £45m. Other business entities (sole traders, freelancers, limited partnerships, limited liability partnerships etc) must have annual turnover of over £45m, generate more than 50% of turnover from trading activity and operate the business activity through a business account.
Viability: A business must submit a borrowing proposal to a bank or approved alternative lender which, “were it not for the COVID-19 pandemic, would be considered viable by the lender”. In effect this means that the lender must believe that the provision of finance will enable the business to trade out of any short-to-medium term difficulty. This is a very important condition and means that businesses would be wise to prepare applications carefully and discuss their applications with both their preferred lender, accountant or business adviser.
Ineligible businesses and sectors: banks, building societies, insurers and reinsurers (but not insurance brokers); the public sector; employer, professional, religious or political membership organisations, or trade unions.
Businesses that have utilised the Bank of England’s Covid Corporate Financing Facility (CCFF) cannot also use CLBILS.
UPDATE 19 May: Businesses borrowing more that £50m must agree:
- not to pay dividends
- to exercise restraint on senior pay