Coronavirus Business Interruption Loan

Table of Contents

So what is CBIL and how does it work

  • Loans are available from the high street banks from £25k- £5m, other funders start from £10k
  • Loan term up to 6 years
  • The High St banks are providing a repayment holiday for 12 months, 3 months from the Alternative funders
  • The scheme is fee free
  • The interest rate will depend on the risk and strength of the business (3-8% above base of 1.10% for the High St, 15-25% for Alternative funders
  • No personal Directors guarantee for loans up to £250k, debenture required for loans above £100k with some banks.  Alternative funders require PG’s
  • The Government pledge to repay the bank 80% of the loan debt should default occur ONLY AFTER ALL AVENUES OF RECOURSE HAVE BEEN EXHAUSTED, CVA’S ETC



What you will need to provide

  • Last 2 years filed trading accounts
  • Recent MI
  • Last 6 months business bank statements
  • Last 4 quarters VAT returns
  • Personal asset and liability statement
  • 12 months cashflow forecast

Covid related questions from funders

  • Have you experienced a loss in trading or any impact on business performance as a consequence of coronavirus?
  • Can you prove that your business would have been able to afford this lending before the coronavirus outbreak (for example, with your financial accounts)?
  • What is the purpose of the requested facility (short term cash flow/longer-term cash injection) and how will the funds be specifically used to address the shortfall caused due to COVID-19?
  • Please provide detail on the amount of the borrowing request and how this amount has been derived. e.g. How much are you requesting and why? Please explain how you have calculated the amount of the request, in what area of your business has the COVID 19 had its impact and how will the monies be used to help the business through this period of disruption. How do you feel the borrowing will support the longevity of the business?
  • On what basis has the amount been calculated? Has this been based on existing (pre virus) income and expenditure levels or future levels? If future, what assumptions are being used? Is it likely further borrowing at a later date will be required?
  • When the Pandemic is over, how long do you think it will take your business to recover? What challenges do you expect to see e.g. future loss of contracts/staff availability?
  • What changes are the business making in the short and longer-term to help drive business performance back to either pre virus levels or beyond?
  • What was your Annual Sales Turnover for 2019?
  • What was your Annual Wage Bill for 2019?
  • Please provide the current number of Employees
  • What are the costs you currently have to pay in regards to running the business e.g. staffing costs, business premises costs, stock and or/other debt costs and what are you doing to reduce these? Please provide us with a list of any other loan and finance commitments currently outstanding, including monthly amounts being made for each of these commitments
  • What have you been able to access in terms of government schemes in response to Covid-19 (Grants/rates non-payment/VAT deferral/Time to pay arrangements)? – please provide details

What can funds be used for

  • Working capital / cashflow
  • Business overheads
  • Rent
  • Staff wages – 20% for furloughed workers or full amount if you can’t do this
  • Paying suppliers
  • Maintain professional services
  • Office disbursements
  • Paying creditors

Commentary/narrative of your business

  • You will need to provide a small write-up of the following.  If you have a Bank Manager who knows you well this will be easier and not so essential.
  • What do you do?
  • How long established?
  • Nature of your business?
  • Who are you customers?
  • Who are your suppliers?
  • Location/premises?
  • What debt does the business already have?

Process

  • The main high street banks are only taking applications from their own customers – so apply to your own bank first
  • Only if your own bank says no, should you apply to another institution. I.e. Alternative funders and P2P lenders who are participating in the scheme.  This could be if your bank won’t give you ALL that you need or nothing at all.  You CAN have 2 or more CBIL loans with different funders (rules apply)
  • Get in touch with us or your bank once you have ALL of your documents together, piecemeal will hold things up and you’ll go to the back of the queue again
  • Your Bank Manager or a central team will present your case to their credit sanctioners for approval and this will take approx. 3-4 weeks.  Once approved, CBIL paperwork and loan agreements need to be drawn up and then funds are released.  Expect funds after approx. 4-5 weeks

Where CBILs won’t work

  • Start-ups
  • Loss making businesses
  • No accounts
  • Consolidation
  • Growth and expansion – normal facilities will apply

What it’s not

  • Free money – its not a grant, it’s a loan that will sit on your balance sheet and needs to be repaid in full
  • It’s not available for businesses already struggling before the crisis, so if you have been loss making, this won’t be offered.  The analogy funders are using is “GOOD, BAD, GOOD AGAIN”
  • It’s not for businesses who cannot recover after 12 months.  A recovery plan should be in place.  
  • A chance to borrow money where little security is being pledged by the business

Next steps if you haven’t already done this….

  • Apply for repayment holidays for any debt you have in the business – loans, HP, commercial mortgages
  • Contact HMRC/your accountant to defer tax liabilities – VAT, Corporation tax, self assessment etc 
  • Suspend your business rates with your local authority
  • Speak to your premises landlord to negotiate a payment holiday
  • Explore furloughing your staff (Job Retention Scheme)
  • Speak to your accountant about the self-employment payout and Director payout scheme
  • Apply for a repayment holiday for your personal debt – mortgage, loans, credit cards, HP
  • Ask to freeze your credit card and overdraft interest
  • Apply for any grants that your business might be eligible for
  • Apply for personal Universal Credit

Next steps if you haven’t already done this….

  • Apply for repayment holidays for any debt you have in the business – loans, HP, commercial mortgages
  • Contact HMRC/your accountant to defer tax liabilities – VAT, Corporation tax, self assessment etc 
  • Suspend your business rates with your local authority
  • Speak to your premises landlord to negotiate a payment holiday
  • Explore furloughing your staff (Job Retention Scheme)
  • Speak to your accountant about the self-employment payout and Director payout scheme
  • Apply for a repayment holiday for your personal debt – mortgage, loans, credit cards, HP
  • Ask to freeze your credit card and overdraft interest
  • Apply for any grants that your business might be eligible for
  • Apply for personal Universal Credit