Coronavirus Business Interruption Loan Scheme (CBILS) – a closer look

We take a closer look at CBILS – a Government scheme to support businesses impacted by coronavirus in the UK.

21 May 2020

This information is based on what's provided on the gov website as of 20 May 2020. We are working hard to ensure that all content on our site is up to date, and will make sure that this page is updated when more information is available.

What is the Coronavirus Business Interruption Loan Scheme (CBILS)?

This government scheme provides finance for small and medium sized businesses whose cashflow has been disrupted by the COVID-19 outbreak. Businesses applying to this scheme will need to show that they had a viable business plan before coronavirus began affecting their business.

For businesses with an annual turnover below £45 million, loans up between £50,001 and £5 million will be provided. Loans of less than £50,001 will be provided through the Government's new Bounce Back Loan scheme. The borrowing business won't be charged any interest or fees for the first 12 months. Under this scheme, the government will also guarantee 80% of any net losses to the lender of a CBILS backed loan.

CBILS provides SMEs with up to £5 million in the form of:

  • Business loans
  • Overdrafts
  • Invoice finance
  • Asset finance

Bigger firms with annual turnovers of between £45 million and £500 million can apply for loans of up to £25 million using the Coronavirus Large Business Interruption Loan Scheme.

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Business loans and asset finance have terms up to 6 years, whereas overdrafts and invoice finance have terms up to 3 years. There will be no upfront costs to CBILS backed finance, as the government will cover for the first 12 months of interest and arrangement fees. There is also no guarantee fee for SMEs to use the CBILS scheme and no personal guarantees for loans under £250,000.

Loans backed by CBILS will be offered at commercial rates of interest with further details of the scheme to be announced by the government.

CBILS will initially run for six months. The scheme is one part of a wider package of government support for UK businesses. You can find a list of all temporary government measures to support businesses here.

Can I get a CBILS loan through iwoca?

iwoca is an accredited CBILS lender, and are offering loans of between £50,001 and £250,000 through the scheme. With an iwoca CBILS loan, there are no personal guarantees and you won't have to pay anything for the first 12 months, including repayments, interest or fees.

We're an accredited CBILS lender.

Is CBILS a grant?

No, you are responsible for repaying the loan as agreed with the lender.

Am I eligible for the CBILS?

The basic requirements to be eligible for this scheme are:

  • Your application must be for business purposes and your business activity must be operated through a business account
  • You must be UK-based with less than £45 million in annual turnover for the 12 months preceding your application
  • Your business must generate more than 50% of its turnover from trading activity
  • Your business must have a borrowing proposal that would be viable if not for coronavirus
  • You can self-certify to show that coronavirus has had a negative impact on your business
  • your business has not been classed as a 'business in difficulty', if applying to borrow £30,000 or more

CBILS finance is not offered to these sectors:

  • Banks and building societies
  • Insurers and reinsurers (not including insurance brokers)
  • Public sector organisations, including state-funded schools
  • Employer, professional, religious or political membership organisations
  • Trade unions

Even if you meet the above criteria, there may be additional restrictions on your eligibility, depending on the lender you enquire with. For example, some are specialist lenders that only offer finance to specific regions or industries. Another example would be a challenger bank with limited financial resources, prioritising access of capital to their existing customers.

Make sure to check each provider’s eligibility criteria before enquiring. We have categorised each of the accredited lenders for you here.

How do I apply?

To see if you qualify for a CBILS backed loan, you’ll need to check with an accredited lender. iwoca was recently accredited for the scheme by the British Business Bank (BBB), meaning we are now able to offer government-backed loans to small businesses struggling as a result of the coronavirus crisis. For more information on our CBILS loans, click here.

Alternatively, check our list of accredited CBILS lenders or contact your banking provider to see if they could help you with any existing products they offer. The list of accredited lenders varies from nationwide high street banks such as Lloyds and Nationwide, to other specialist lenders.

Coronavirus updates for SMEs

Coronavirus: stay updated

Our coronavirus bulletin covers all the key developments and delivers a digested summary straight to your inbox. We’ll send these out whenever there are key updates we think will help your business.

I’m having problems accessing CBILS through my bank, what are the other options?

The good news is that you can apply to other lenders. Plus, updates to the scheme on 3 April mean that accredited lenders no longer need to assess whether your business is eligible for their existing products before offering you a CBILS loan.

If your current banking provider can't help you, see if you could apply for an iwoca CBILS loan by visiting our dedicated CBILS page.

If CBILS isn't for you, have a look at some of the other financial help available for businesses affected by coronavirus.

Will I need security to get a CBILS-backed loan?

The primary residence of business owners cannot be taken as security for CBILS backed loans. However, it still requires accredited lenders to take security and personal guarantees in line with their normal lending criteria. Each accredited lender has discretion to choose what they take as security for all loans because lenders must apply their normal underwriting criteria to provide CBILS backed finance.

On 3 April, the Chancellor announced that no personal guarantees can be taken on CBILS backed loans under £250,000. For loans above £250,000, recoveries are capped at 20% of outstanding balances of the CBILS facility after securities are applied.

It’s important to note that the borrower will be liable for 100% of the debt in every case. The government guarantee to CBILS backed loans is for the lender providing you access to finance, not the borrower.

What information is needed to apply to CBILS?

Most lenders will ask for the following information to assess your eligibility:

Details of the loan to check if it is for a suitable business purpose, is the right type of finance for your needs and whether the loan is affordable for you. This includes:

  • the amount you wish to borrow
  • what the money will be used for
  • the term of repayment

Supporting documents to show that you can repay the loan. This will vary from lender to lender and might include:

  • Cashflow forecast
  • Business plan
  • Management accounts
  • Historic accounts
  • Details of assets

If you’re approaching your existing financial provider, the process might be automated and you won’t need to provide as many documents.

What can I use CBILS for?

This scheme is designed to support small businesses who are considered viable in the long-term if not for COVID-19 but don’t meet a lender’s normal lending requirements for a commercial loan. The goal of providing CBILS finance is to enable your business to trade out of any short-to-medium term difficulty.

Your CBILS-backed facility must be used to support trading in the UK. Use CBILS finance for:

  • Managing cash flow, such as paying your employees
  • Buying inventory
  • Purchase or lease of property
  • Developing a project
  • Starting a business or expanding an existing business
  • Research and development

Depending on who your provider is, there might be additional restrictions on how the finance can be used so make sure to check with the lender.

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Kelly is a marketing analyst at iwoca with a focus on direct marketing, CRM and analytics. She previously worked with American Express and Amnesty International.

Article updated on: 26 May 2020

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Coronavirus updates for SMEs

Our coronavirus bulletin covers all the key developments and delivers a digested summary straight to your inbox. We’ll send these out whenever there are key updates we think will help your business.