In a blog last week, we told you about the government’s Coronavirus Business Interruption Loan Scheme (CBILS). Since its introduction CBILS has garnered criticism from SMEs, so much so that the chancellor has announced some improvements to the scheme to make it accessible to more of you.
Changes that the government is making to the Coronavirus Business Interruption Loan Scheme are designed make it easier for businesses like yours to access the lending, helping you to continue trading and protect the livelihoods of your staff.
What are the main changes? We outline them here:
- Current loan scheme extended
- Lenders banned from requesting personal guarantees on loans under £250,000
- New scheme announced to support larger firms not currently eligible for loans
- More information
Scheme extended
To maximise the support available, the Chancellor is extending the CBILS so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, are eligible should they need finance to keep operating during this difficult time.
Severely depleted cash flow is the most immediate threat to the survival of millions of small businesses like yours. Read more about other ways to keep your cashflow healthy in times of crisis.
Viable small businesses that have experienced a negative impact on their cashflow as a result of coronavirus can now directly access CBILS rather than being offered a bank’s own standard commercial lending product first.
Personal guarantees for loans under £250,000 scrapped
Under the new changes announced by the chancellor, the government is also preventing lenders from requesting personal guarantees for loans under £250,000. It will also make some operational changes to speed up lending approvals. There will be further announcements from the government on what these operational changes will be in the coming days so watch this space. What is known is that the government will continue to cover the first twelve months of interest and fees.
For loans over £250,000, personal guarantees will be limited to just 20% of any amount outstanding on the CBILS lending after any other recoveries from business assets. Lenders are prohibited from asking business owners to put their house on the line, but these new changes will provide further reassurance regarding personal assets during this difficult time.
Of course, it is possible to insure yourself and your business in the event that you have to provide a personal guarantee.
NB – If one lender turns you down, you can still approach other lenders within the scheme.
Support for larger firms
The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more firms are able to benefit from government-backed support during the coronavirus crisis. It will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. This will give banks the confidence to lend to more businesses which are impacted by coronavirus which they would not lend to without such a guarantee. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.
These improvements to the Coronavirus Business Interruption Loan scheme will help firms get access to cash more quickly, and the announcement of a new loan scheme for mid-sized companies closes a significant gap in existing support.
More information
For help and advice on the availability of financial support for your business please call us on 0203 327 0567 for a free 15-minute problem-solving chat or email [email protected]