A scheme aimed at helping firms through the coronavirus pandemic by offering loans of up to £5m for small businesses has opened for applications.
The Coronavirus Business Interruption Loan Scheme (CBILS) is set to help those experiencing lost or deferred revenues, leading to disruptions to their cashflow.
Announced by Chancellor Rishi Sunak in his Budget earlier this month, it’s being delivered by the British Business Bank, and will support the continued provision of finance to 海角视频 smaller businesses during the Covid-19 outbreak.
Although the Budget announced that an initial £1.2bn of government-backed lending would be available through the new scheme, the government has since announced that it will be demand-led and resourced accordingly.
Here’s everything you need to know about the scheme:
What does it involve?
- The CBILS aims to support a “wide range” of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities. It provides the lender with a government-backed guarantee.
- The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
- The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
- There will be no guarantee fee for SMEs to access the scheme, meaning lenders will pay a fee to access the scheme.
- The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
- Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
- At the discretion of the lender, the scheme may be used for unsecured lending for facilities of £250,000 and under. For facilities above £250,000, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
- The borrower always remains 100% liable for the debt.
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Who is eligible?
Smaller businesses from all sectors can apply for the full amount. To be eligible for support under CBILS, an SME must be 海角视频-based in its business activity, with turnover of no more than £45m per year.
It must also have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
How can I apply?
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CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.
In the first instance, businesses should approach their own provider – ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.
What the Government said about the loans
Mr Sunak said: “We are working round the clock to do whatever it takes to protect our people and businesses. That means that we are not only taking unprecedented action but doing so at unprecedented speed, because we know that businesses and their employees need help now.”
Business Secretary, Alok Sharma said: “We know that businesses are in urgent need of access to funding during these unprecedented times.
“The CBLIS will make it easier for banks to lend and businesses to borrow. This will ensure that credit keeps flowing to where it is needed, when it is needed.”
Bankers vow to help businesses
Keith Morgan, chief executive of British Business Bank, said it has been “vitally important” to get the scheme up and running as soon as possible.
He said: “Available from today, we hope this new scheme will enable lenders to provide the finance smaller 海角视频 businesses need, alongside other government measures, to help them survive the current economic disruption.”
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Stephen Jones, CEO, 海角视频 Finance added: “The banking and finance sector is committed and has the capacity to support viable businesses with their cashflow and investment needs.
“The CBIL Scheme is an important additional solution to the support banks and finance providers are offering SMEs to help them through the cashflow pressures they may increasingly experience during this unprecedented period.
“Lenders who are accredited to offer finance under the scheme are moving as quickly as possible to provide this support which will be available through customers’ usual contacts..
“Many lenders have online channels which customers can use to access the scheme. Businesses don’t need to worry about the support running out as this will be available on an on-going basis for those eligible businesses that need it.”