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Coronavirus Business Interruption Loan Scheme (CBILS) Update

23 March 2020

Further details have today emerged on the CBILS support that is available.

Key aspects include:

  • Amount up to £5m
  • Term up to 6 years
  • 80% government backed guarantee to the funders, but in an event of default the borrower will remain liable for the amount, however this will assist the credit appetite
  • The scheme includes Loans, Overdrafts, Invoice Finance and Asset Finance Facilities
  • Interest & Fees paid by the government for the first 12 months
  • No early repayment penalty/fee
  • The scheme is handled through 40+ accredited lenders
  • Capital repayment holidays feature

The following criteria are key for eligibility:

  • UK based business activity
  • Annual Turnover no more than £45m
  • Lenders will assess requests on a case by case basis, where the acid test is whether the lender believes the borrowing proposal would be considered viable if the current pandemic was not present and where the lender believes the provision of the finance will enable the business to trade out of any short to medium term difficulty
  • Applicants will need to show they are undertaking appropriate mitigating actions and ideally have a Covid-19 Plan with supporting forecasts with built in stress tests or ‘what if scenarios’
  • For further details on the British Business Bank website please click here.

In addition to the CBILS facility, the Bank of England has launched the separate Corporate Financing Facility (CCFF). This facility is for larger organisations that make a material contribution to the UK economy and that had, prior to being affected by Covid-19, a short or long-term rating of investment grade, or financial health equivalent to an investment grade rating. Further details to follow.

It is apparent that there is currently a gap in coverage for mid market businesses that have Turnover of £45m+ but are sub investment grade – this has been ‘flagged’ and a response awaited.

Access to the CBILS facility should be considered in conjunction with the range of other measures that the government has announced and as part of your own Covid-19 Plan that you are putting in place.  Seeking professional advice and early engagement with key stakeholders, including funding partners is paramount.  We remain in active dialogue with all banks, alternative providers of finance, the British Business Bank and the CBI, amongst others.

Gambit Corporate Finance has a dedicated debt advisory team. We would be happy to speak with any companies that have concerns and wish to understand the options available to them, including working to finalise a Covid-19 Plan and CBILS application.

Jason Evans, Partner of Gambit Corporate Finance LLP and leads the Debt Advisory Team