Coronavirus Business Interruption Loan Scheme: Chancellor to revise SME loan scheme

Coronavirus Business Interruption Loan Scheme: Chancellor to revise SME loan scheme

CBILS Press release 

Changes to the Coronavirus Business Interruption Loan Scheme will be announced this week by Rushi Sunak as SME businesses struggle to access funds from banks, with applications of near 130,000 so far and only around 1,000 accepted.

The changes include:

  • For facilities under £250,000, use of personal guarantees will not be permitted under the scheme.
  • The requirement for banks to first assess whether SMEs are eligible for their other lending options will be removed.

The changes will aim to speed up decisions by the high street banks and channel loans more quickly to those businesses that need them.

The Treasury has moved following reports that since CBILS launched that business owners were being denied loans through the insistence of personal guarantees or being forced to use other standard SME loan products, which do not benefit from the governments guarantee.

Any business with a turnover of up to £45m will be able to access the scheme, which is interest-free and fee-free for the first 12 months. Users of the scheme will be required to demonstrate that their company was viable going into the crisis, and that they have the ability to repay the loan at the end of the term.

Currently the maximum facility being offered by lenders was a maximum of 25% of 2019 turnover or 2x annual wage bill, whichever is greater. This is not mentioned in the recent changes so expect this to remain the same.

Other aspects of CBILS’ structure, including the government guarantee that covers 80% of the lenders’ exposure, are likely to remain unchanged for now.

The Chancellor also announced a scheme for larger companies. The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will offer loans of up to £25m to firms with an annual turnover of between £45m and £500m, which come with a government guarantee of 80 per cent.

Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.

Haslers can help with applying for CBILS or for other funding eligible for your business – Please get in contact and we will see if we can assist.

 

Coronavirus Business Interruption Loan Scheme: Chancellor to revise SME loan scheme