The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.
Written on April 6, 2020 by Xeinadin Group
This will give banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.
We expect the scheme to be delivered through commercial lenders. The government will provide lenders with an 80% guarantee on individual loans for businesses that would be otherwise unable to access the finance they need.
Lenders will still be expected to conduct their usual credit risk checks. This scheme allows lenders to specifically support businesses that were viable before the COVID-19 outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.
The new scheme will launch later this month and will support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and asset finance.
Businesses would remain responsible for repaying any facility they may takeout.
To be eligible, your business must:
- be UK-based in its business activity
- have an annual turnover between £45 million and £500 million
- be unable to secure regular commercial financing
- have a borrowing proposal which the lender:
- would consider viable, were it not for the COVID-19 pandemic
- believes will enable you to trade out of any short-term to medium-term difficulty
Businesses from any sector can apply, except for the following:
- banks and building societies
- insurers and reinsurers (but not insurance brokers)
- public-sector organisations, including state-funded primary and secondary schools
Further detail on eligibility will be confirmed later this month.
How to access the scheme
The new scheme will launch later this month. We anticipate it will be available through a range of accredited lenders.
Once the scheme has launched, there is likely to be a big demand for facilities - businesses should consider applying via the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquiries due to social distancing.