How to access the Coronavirus Business Interruption Loan Scheme
How to access the Coronavirus Business Interruption Loan Scheme

How to access the Coronavirus Business Interruption Loan Scheme

With the country now weeks into coronavirus lockdown, loss of revenue and cashflow is starting to bite for many small businesses, freelancers and sole traders.

We have promised to keep the Penny community updated with information and updates to help them mitigate the financial impact of this national crisis.

Coronavirus Business Interruption Loan Scheme (CBILS)

In this bulletin we’re turning our attention to how businesses can access the Coronavirus Business Interruption Loan Scheme - catchy name eh!

Also known as CBILS, it forms one part of a wider package of government support measures for businesses and inidividuals.

The scheme has been newly expanded so that many more businesses will be eligible to ensure they can access the funding they need.

How it works

CBILS is operated by the government-owned British Business Bank via over 40 accredited lenders, including high street banks, challenger banks, asset-based lenders and smaller specialist lenders.

A lender can provide a business with up to £5 million using a range of funding mehtods, inclduing loans, overdrafts, invoice finance and asset finance.

CBILS gives the lender a government-backed guarantee to encourage lending, however the borrower remains fully liable for the debt.

Personal guarantee requirements

Under the Coronavirus Business Interruption Loan Scheme, personal guarantees won’t be required for any facility under £250,000.

For funding provisions over £250,000, personal guarantees may be required at the lender’s discretion, but:

  • recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied;
  • a Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility.

Who is eligible?

To be eligible for the Coronavirus Business Interruption Loan Scheme, your business must:

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consoder viable if it wasn’t for the coronavirus pandemic
  • Self-certify that it has been adversely affected by Covid-19.

Businesses in any sector can apply with the exception of:

  • Banks, insurers and reinsurers
  • Public-sector bodies
  • Grant-funded further education establishments
  • State-funded schools

How to apply for funding under CBILS

Basically there are 4 steps to accessing funding under the Coronavirus Business Interruption Loan Scheme:

  1. Find an accredited lender from this list. Not every lender will offer every type of finance avialble under CBILS and amount available will also vary depending on the lender.

  1. Approach your lender of choice via their website or contact centre. Bear in mind this is a really busy time for them, so some patience will be required!

  1. The lender will decide if they can offer you finance. They won’t take any personal guarantees for facilities under £250,000.
  2. If one lender turns you down, you can still apply to others in the scheme. If you have previously been turned down for funding under the scheme, don’t forget that access to the scheme has recently been opended up to more small businesses, so it may be worthwhile getting back in touch with your lender.

Criticism of the scheme

Despite the government's assurances on the CBILS's reach and accessibility, it is coming in for a lot of criticism. At the time of writing, only one in five businesses who have applied, have actually received funding.

The Financial Times reported that many businesses are frustrated by the strict rules on eligibility and lenders struggling to process applications. Some small businesses told the FT that it has taken a week or more for lenders to even respond to their initial enquiry.

An alternative? Finance your invoice with Penny

If you don’t want to apply for funding under the Coronavirus Business Interruption Loan Scheme, you have applied and are still waiting, or you have been turned down, an alternative way to immediately inject cashflow into your business is to finance your invoices with Penny.

Since the coronavirus started, we’ve heard of lots of cases of clients trying to delay or avoid paying invoices in order to bolster their own cash reserves, so it’s really difficult if you are a micro business or freelancer who just wants your invoice paid!

You may be able to sell your invoice to Penny for up to 90% of its value and get paid straight away. If you have any questions about how it works, please don’t hesitate to contact the team by phone, webchat, email or social media.

Keeping you updated

We hope you are all staying safe, well and as upbeat as possible in these uncertain times.

We’ll continue to keep in touch with more (hopefully!) useful stuff over the weeks to come.

This blog was originally published on 14th April 2020 and was updated on 17th April 2020


Lynne Gowers

Lynne Gowers

Lynne is a highly experienced marketing and communications professional and leads the team here at Penny. LinkedIn.

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