CBILS FAQ: Frequently Asked Questions 2021 [Coronavirus Business Interruption Loan Scheme]

CBILS is an acronym which stands for ‘Coronavirus Business Interruption Loan Scheme’. It is a government backed loan scheme, set up to assist businesses access finance during the pandemic.

Qualifying businesses can apply for loans under the scheme up to £5 million from a range of banks and specialist lenders. The government provides a guarantee to the bank and pays the first years interest and arrangement fees.

As explained above a CBILS loan is a government backed loan of up to £5 million. The main features of the scheme are the Government pays interest and fees for 12 months, no personal guarantees for facilities under £250,000 and terms up to 6 years.

You still need to prove affordability for a CBILS loan, so the amount your business can lend will be turnover dependant. However under the scheme you can borrow up to £5 million, personal guarantees are not required for up to £250,000.

If you already have a Bounce Back Loan, this will be need to be repaid from any new CBILs lending as you cannot have both. Bounce Back Loans are up to £50,000.

The current end date for new applications is 31st March (at the time of writing 4th Jan 2021).

Although individual lenders may close to new applications prior to this date. Its also worth noting that approved lenders under the scheme have allocated lending limits and some have already used up their allowance.

Unlike the bounce back loan, interest rates on CBILS loans are not fixed by the scheme and vary between different lenders. The rate you receive will be confirmed when a lender offer is made and may be depending on your businesses circumstances.

Advertised rates start from 1.8% to over 15% annual interest.

If you qualify under the scheme, the Government will cover the first 12 months interest on your facility via what’s called a Business Interruption Payment (BIP).

According to the British Business Bank a CBILS-backed facility must be used to support trading ONLY in the UK. It cannot be used for overseas trade or ventures. So as long as its for legitimate UK business trading purposes, there is not a strict mandate on its uses.

Examples of what a CBILS loan can be used for:
– General cashflow, such as paying suppliers and employees
– Buying inventory, goods and stock
– Purchase or lease of property
– Developing or starting a new project
– Starting a new business venture or expanding an existing business
– R&D (Research and development)

Some lenders may also have additional restrictions and use purposes. You will need to check this when making an application. Apply for a CBILS today.

No, you cannot have both a CBILS and Bounce Back Loan (BBL) at the same time. However you can apply for a CBILS loan and repay the BBL using some of the money received.

For example:

Company A – Already has a bounce back loan of £50,000

They are approved for a CBILS loan of £150,000

£50,000 goes towards repaying the BBL.

Company A receives £100,000 and now has just one outstanding loan of £150,000. The new repayment terms will apply as per the lending offer for the CBILS loan.

The current maximum loan term offered under the scheme is 6 years. However different approved lenders under the scheme offer different terms, such as 2 years, 3 years and some up to the maximum 6 years. You will need to check when applying what the maximum loan terms is.

Also some lenders are offering no capital repayments for the first 12 months, this means the are no repayments at all in the first 12 months. This is because the interest is covered by the government.

Click here to get in touch to discuss your options.

You can have more than one CBILS loan, there is technically no maximum. In reality the maximum number of CBILS loans you can have, will be dictated by the total amount you have borrowed rather than number of loans.

Your business could take out CBILS backed:
Asset Finance
Invoice Finance
Business Loan
Asset Refinance

For each application you will need to prove affordability either based on your 2019 turnover or other relevant financial information.

Yes a CBILS loan can potentially be used as part of Management Buy Out (MBO). Its important that this is taking into account when apply, as not all lenders will support a finance application as part of an MBO.

There have been numerous reports in the news of MBO’s being funded by CBILS loan applications.

Contact Us today to speak with one of our funding experts about MBO finance.

Yes, in principle an existing business could use a CBILS loan or finance facility to purchase another business. The business making the acquisition would still need to meet the standard eligibility criteria. Also it would need to be within the UK and would ultimately be down the the bank/lender to approve.

To discuss making an acquisition with a CBILS backed loan, get in touch with one of our funding experts today.

Yes a CBILS loan can potentially be used for property transactions. This could either be for purchasing a trading premises with a commercial mortgage or for SME’s involved in real estate such as investors and house builders. For property investors more than 50% of income must come from commercial activity that generates turnover.

We have a number of lenders approved on the scheme, offering the following property related finance:

– CBILS Commercial Mortgages
– CBILS Development Finance
– CBILS Bridging Loans

Yes it may be possible to buy a business using a CBILS backed facility. However it will depend on a number of factors such as the target businesses circumstances and how the deal needs to be structured. Given the potential complexity of such an application, its worth speaking professional advice.

See the Q&A’s above regarding MBO’s and acquisitions.

As an independent commercial finance broker, we can assist with all types of finance for buying a business. Click here to get in touch.

Yes you can still apply for a CBILS loan until the 31st March 2021. Although the government has extended the scheme end date several time already, there is no guarantee that they will do so again. Also some lenders have backlogs of application and in the past have closed new applications early prior to the deadline.

As of the time of writing, the current last day for applications to be submitted is 31st March 2021. Its possible this may be extended by the government (as they have done previously), but there it may close for good this time.

The current scheme is due to end on 31st March 2021, there are currently no plans to extend the scheme beyond this. However the scheme has changed and been extended many time in 2020. To find out the latest close date, visit the British Business Bank website.

Provided you meet the qualifying criteria, you can apply for a CBILS loan of up to £5 million with one of the accredited loan providers. A guarantee is provided to the bank to encourage lending but the borrower remains 100% liable for the debt. The government pays the first 12 months interest & fees, also loans under £250,000 do not require personal guarantees from directors.

We can source a lender and apply on you behalf, click here to get in touch.

A full list of lenders is published here on the British Business Bank website.

No, you cannot currently extend a CBILS loan to 10 years. If when you begin to make repayments you are struggling to pay them. You must contact contact your loan provider to discuss your available options. Decisions will be made on a case by case basis.

The official maximum loan under the CBILS scheme is £5 million. The maximum you can borrow without providing a directors personal guarantee is £250,000. However the maximum that your business can borrow will depend on affordability factors such as 2019 turnover and future expected income/contracts.

Click here to find out more and apply for a CBILS loan

The application process for applying for a CBILS loan varies between approved scheme lenders. If you need to access funds quickly, then you need to make sure you apply with a lender offering quick turnaround times. Some lenders are processing applications in as little as 2-3 days.

We can assist in getting quick assess to CBILS loans, call us on 01204 860113.

There are currently 114 accredited lending partners approved by the British Business Bank to issue CBILS backed loans. However not all of them are open for new customer applications and some are restricted to certain types of finance and industries.

To find out which lenders may provide you with a CBILS backed loan, get in touch with one of our funding experts today.

A full list of the approved lenders can be found here on the British Business Bank site.

Yes a CBILS loan can be unsecured, if your business meets the eligibility criteria and passes the banks underwriting checks. For loans up to £250,000 no personal guarantees (PG) are required, loans above this may request a director PG.

However there are different types of CBILS finance and not all of it is unsecured. Security may be provided for CBILS backed finance such as:

– Invoice Finance
– Secured Loans
– Asset Finance
– Commercial Mortgages
– Development Finance

Yes, in principle CBILS can be used to refinance existing debts in the business. This could be with or without additional borrowing, provided it improves the financial standing and/or cashflow of the business. The business will still need to meet the standard eligibility criteria and the new lender will need to approved the ‘purpose’ of the loan.

The scheme is currently due to be withdrawn on 31st March 2021. Although its worth noting that individual approved lenders could withdraw their offering at any time. Each has an allocated lending limit and also some have been know to get back logs of applications.

Its not just business loans that can be applied for under the Coronavirus Business Interruption Loan Scheme. There are also a number of approved lenders that will provide asset finance for purchasing vehicles, machinery, equipment and other hard assets. Asset finance can also be used to refinance existing hard assets to release cash for other business purposes.

Asset Finance Can Be Used For:
– Vehicles such as Cars and Vans
– Equipment & Machinery
– HGV & Trailers
– Coaches & Buses
– Construction Equipment

Yes you can potentially get additional CBILS funding, provided your turnover supports it. However you may need to go to a different lender from your original loan provider, if they will not increase the loan size. You could also look at different types of CBILS backed funding such as invoice finance, secured property loans and asset finance.

It is currently 31st March 2021.