Contributed by MJB Avanti
21/04/2020 - MJB Avanti
As well as providing constant updates to the guidance for businesses during the Coronavirus pandemic, Avanti have put together a handy guide to the Coronavirus Business Interruption Loan Scheme and now offer a CBILS application service.
CBILS is a new scheme, announced by The Chancellor at Budget 2020, that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance. The scheme provides the lender with a government-backed guarantee potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’. The borrower always remains 100% liable for the debt.
Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years.
80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender.
No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
Interest and fees paid by Government for 12 months: 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: 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.
Security: 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.
Smaller businesses from all sectors  can apply for the full amount of the facility. To be eligible for a facility under CBILS, an SME must:
Please note: If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
Some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme.
Full details are available here
CBILS is available through the British Business Bank’s 40+ accredited lenders, and can be viewed here.
Businesses should approach their own provider – typically via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need.
Decision-making on whether you are eligible for CBILS is fully delegated to the 40+ accredited CBILS lenders. These lenders range from high-street banks, to challenger banks, asset-based lenders and smaller specialist local lenders.
Note: if the accredited lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so.
CBILS supports a wide range of business finance facilities, including:
Additional application notes:
Given there is likely to be a big demand for facilities once the scheme goes live, The British Business Bank asks you to please:
Consider applying via the lender’s website in the first instance. Telephone lines are likely to be busy and branches may have limited capacity to handle enquires due to social distancing
Consider the urgency of your need – it is possible that some businesses may be looking for regular longer-term finance rather than ‘emergency’ finance, and there may other businesses with a more urgent need to speak with a lender.
A useful summary to compare business loans can be found on www.knowyourmoney.co.uk
Applications should be made to your usual bank or finance company.
Avanti can advise you on making the loan application. There will be administration and information to collect before you make the application. Typically, banks will require three years trading results and a Statement of “Support and Resilience”.
The loan process typically involves:
Note: Most banks have not updated their websites or provided details of the Coronavirus Business Interruption Loan Scheme. Please keep your eye out for updates.
Avanti are now offering a Loan Application Service (BLIS), providing the following requirements to assist application
Several Avanti clients have already been successful in obtaining the relevant grants and loans – For further details on these or Avanti’s other services call 01473 558866
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