The Government has responded to wide spread criticism of how the Coronavirus Business Interruption Loan Scheme (CBILS) (for smaller businesses) has been implemented. It has also recognised that, in terms of the loan schemes it has introduced in response to COVID-19, there is a funding gap for mid-market businesses with an annual turnover between £45 million and £500 million. It has put in place a new loan scheme for these mid-market businesses.

CBILS.  We have previously written about the CBILS.  To recap, CBILS:

  •  Is a package of loans and guarantees to enable smaller businesses to continue operating.
  • These include government backed loans of up to £5m interest free for 12 months for businesses with an annual turnover of up to £45m. 
  • These loans are limited to 25% of 2019 turnover or twice the annual wage bill whichever is greater.
  •  The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees.  This is to ensure no upfront costs and lower initial repayments.
  • The Government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in providing finance. 
  • The scheme will be delivered through more than 40 accredited lenders, backed by the Government-owned British Business Bank. 

On 3 April 2020, the Government issued a Press Release making certain changes including:

  • Making CBILS available to all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing.
  • Stopping lenders from requesting personal guarantees for loans under £250,000.

CLBILS.  In the same Press Release, the Government announced a new Coronavirus Large Business Interruption Loan Scheme (CLBILS) for mid-market businesses. Under the CLBILS, the Government will provide a guarantee of 80% on loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest. Further  details of the scheme will be announced later in April 2020.