Coronavirus Large Business Interruption Loan Scheme (CLBILS) FAQs

CBILS provides facilities of up to £5 million for smaller businesses across the UK that are impacted by Covid-19. CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

Note: This scheme is just one of a number of measures announced by Government. You can find full details of measures to support public services people and businesses through this period of disruption caused by coronavirus.

CBILS guarantees facilities up to a maximum of £5 million, are available on repayment terms up to six years (for term loans and asset finance) and up to three years (for overdrafts and invoice finance facilities). A term extension beyond these limits, up to a maximum of 10 years for existing CBILS facilities can be made in connection with the provision of forbearance relating to the facility, at the discretion of the lender if within its usual forbearance policies.

The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility. The business remains 100% liable for repayment of the facility.

There is no guarantee fee for SMEs to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment. You (the SME) will therefore benefit from no upfront costs and lower initial repayments. Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM Government greatly appreciates this approach by lenders.

CBILS supports a wide range of business finance facilities, including:

• term loans
• overdrafts
• asset finance
• invoice finance

Note: Not every lender can provide every type of finance listed. CBILS is available through the British Business Bank’s accredited lenders, which are listed on the British Business Bank website.

Smaller businesses (SMEs) from all sectors ^{Read footnote text 4}  can apply for the full amount of the facility, up to a maximum of £5 million. To be eligible for a facility under CBILS, your business must meet the eligibility criteria for the Scheme, which includes:

• 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 consider viable, were it not for the current pandemic;
• self-certify that it has been impacted by the coronavirus (COVID-19); and
• not be classed as a business or ‘undertaking’ in difficulty.

Importantly, access to the scheme is open to smaller businesses that previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. You may therefore consider re-contacting your lender if you have previously been unsuccessful in securing funding.

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  The following trades and organisations are not eligible to apply: Banks, insurers and reinsurers (but not insurance brokers); public-sector bodies and state-funded primary and secondary schools.

CBILS is available through the British Business Bank’s accredited lenders, which are listed on the British Business Bank website.

In the first instance, you should approach your own provider – ideally via the lender’s website. You may also consider approaching other lenders if you are unable to access the finance you need.

Decision-making on whether you are eligible for CBILS is fully delegated to the accredited CBILS lenders. These lenders range from high-street banks and challenger banks to asset-based lenders and smaller specialist local lenders.

Note: Potential applicants should 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 enquiries due to social distancing.

CBILS closed for new applications on 31 March 2021.

You will need to provide certain documents when you apply for a CBILS-backed facility. These requirements vary from lender to lender, but are likely to include:

• Management accounts
• Business plan
• Historic accounts
• Details of business assets

If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

Note: For many customers approaching their existing lenders for a smaller facility, the process may be automated and therefore may not require the same level of documentation.

There is no guarantee fee for SMEs to use CBILS. Interest and lender levied fees will be met by the Government for the first 12 months after drawdown of your facility via a Business Interruption Payment (BIP).

Interest rates will vary between lenders and will depend on the specific lending proposal. Please speak to your lender, who will be able to give you full details on what interest rates will be payable by you after the BIP has concluded.

Yes. You must show in your borrowing proposal that were it not for the current pandemic, the lender would consider your business viable.

You must also self-certify that your business has been impacted by the coronavirus outbreak.

Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

• they exclude the Principal Private Residence (PPR); and
• 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

For all facilities, including those over £250,000, CBILS supports lending to smaller businesses even where a lender considers there to be sufficient security. Where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility.

A borrower’s/guarantor’s Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBILS-backed facility (but a lender may wish to do so to support a commercial facility alongside the CBILS-backed facility).

For CBILS facilities below £250,000, personal guarantees cannot be taken by lenders in relation to the facility under the Scheme.

For CBILS facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but they exclude the Principal Private Residence (PPR) and 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 worked example to show what this change will mean in practice:

• £1 million facility
• Business pays off £400,000, then defaults, owing £600,000
• Lender recovers £100,000 from other business assets secured, such as a debenture (e.g. stock), leaving £500,000 outstanding
• Call on personal guarantee is £100,000 (20% – not the full £500,000 as previously), leaving £400,000 as a loss
• Government covers £320,000, lender loses £80,000

CBILS is open to all eligible borrowers – your business does not need to be an existing customer of the lender you are approaching.

You can, in certain circumstances, use a CBILS facility to refinance existing debt. For example, where you are seeking to put your business on a more stable financial footing and/or improve your working capital position, then, in principle, a CBILS facility could be provided, providing you fulfil the eligibility criteria for the Scheme.

Refinancing can be undertaken with or without an increase in the original borrowing. Any refinancing will be treated as a new facility and the application will need to meet the eligibility criteria for a CBILS facility.

CBILS is designed to support a wide range of smaller businesses (i.e. with an annual turnover of less than £45 million) across the UK who have been impacted by the Coronavirus crisis.

Under CBILS, the definition of SME is confined to the turnover of an applicant (or an applicant’s group), which must not exceed £45 million. The borrower cannot be an individual other than where the individual is a sole trader or a partner in a partnership and is acting in a business capacity.

If your business is part of a group, controlled on either a legal or de facto basis, the maximum turnover applies to the group undertaking. More than one company within the group can be considered for a CBILS facility but only if the consolidated group turnover does not exceed the £45 million annual turnover threshold. The qualifying period is 12 months preceding application.

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) is available for facilities of up to £50 million to firms with an annual turnover above £45 million.

If it is a sole enterprise it is the turnover of the applicant only, as shown in the latest set of accounts. For applicants acting as part of a group, that have partners or linked enterprises, the turnover assessment should take the latest turnover of the applicant, as shown in their accounts, together with the turnover of any linked enterprises, any partners of any linked enterprises, any enterprises linked to any of the applicant’s partners and any enterprise linked to the applicant’s linked companies.

A sole business (for the purposes of CBILS) is one that holds no more than 25% of the capital or voting rights (whichever is higher) in one or more other businesses; and/or other businesses hold no more than 25% of the capital or voting rights (whichever is higher) in them; or it is not linked to another business according to the criteria for “linked enterprises”.

In addition, certain investors may individually have a stake of up to 50% in the business and it may still be considered a sole business ^{Read footnote text 5} : public investment corporations, venture capital companies ^{Read footnote text 6}  and business angels ^{Read footnote text 7}  (provided the investment is less than €1.25 million), universities and non-profit-making research centres, institutional investors, (including regional development funds) ^{Read footnote text 8} , or autonomous local authorities (with an annual budget of less than €10 million and fewer than 5,000 inhabitants).

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  An enterprise will not be categorised as an SME if 25% or more of its capital or voting rights are directly or indirectly owned or controlled, jointly or individually, by one or more public bodies (except those listed in a) to d) which can hold up to 50%).

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  Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM Government greatly appreciates this approach by lenders. A private equity/venture capital investment fund is a vehicle for enabling pooled investment by a number of investors in the equity and equity-related securities (such as quasi-equity) of companies (investee companies). These are generally private companies whose shares are not quoted on any stock exchange. The fund can take the form either of a company or of an unincorporated arrangement such as a limited partnership. In form, a private equity/venture capital company can either be a company or a limited partnership: a few are quoted on stock markets

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  Business angels are private individuals who either solely invest their own cash in SMEs or alternatively invest in syndicates where typically one angel in the syndicate takes a lead role. Angels normally have no previous family connection with the business and make their own investment decision rather than making a decision through an independent manager. The lead angel of the syndicate or the angel investing alone will typically follow the investment after it is made by observing and providing his/her knowledge, experience and support to the investee company by way of mentoring assistance.

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  The European Commission does not formally define the concept of ‘institutional investors’. They are, however, usually seen as investors which trade large volumes of securities on behalf of a great number of individual small investors and which have no direct involvement in the management of the firms in which they invest. The term ‘institutional investor’ refers mainly to insurance companies, pension funds, banks and investment companies that collect savings and supply funds to the markets, but the term also applies to other types of institutional wealth (e.g. endowment funds, foundations, etc.). Usually these have substantial assets and are experienced investors.

Linked businesses form a group by controlling the majority of voting rights of an enterprise, either directly or indirectly; or being able to exercise dominant influence over an enterprise.

Enterprises are linked when one holds a majority of the shareholders’ or members’ voting rights in another; or can appoint or remove a majority of the other’s administrative, management or supervisory body; or there is a contract between them enabling one to exercise a dominant influence over the other; or one can exercise sole control over a majority of shareholders’ or members’ voting rights in another. A typical example is a wholly owned subsidiary.

An enterprise is indirectly linked to a business if it is directly linked to an enterprise that is linked directly to the business.

A ‘partner’ enterprise describes the situation when an enterprise establishes certain financial partnerships with other enterprises, without one enterprise exercising effective direct or indirect control over the other. Partners are enterprises that are neither sole enterprises nor linked to one another.

This is the case where an enterprise has a holding equal to or greater than 25% of the capital or voting rights in another enterprise and/or another enterprise has a holding equal to or greater than 25% in the enterprise in question.

Provided that they satisfy the other eligibility criteria for the Scheme, CBILS is open to:

• • sole traders
  • freelancers
  • bodies corporate
  • limited partnerships
  • limited liability partnerships, and
  • any other legal entity carrying out business activity in the UK with:
  • an annual turnover up to £45 million, and
  • business activity operating through a business account operating in any sector ^{Read footnote text 9}

The business must generate more than 50% of its turnover from trading activity.

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  The following trades and organisations are not eligible to apply: Banks, insurers and reinsurers (but not insurance brokers); public-sector bodies and state-funded primary and secondary schools.

Yes, an eligible SME must generate more than 50% of its income from trading – the sale of goods or services. CBILS is not designed to support shell companies. Registered charities and further education establishments are exempt from this requirement.

Potentially, if your business activity is primarily UK-based. For early-stage businesses in their first three years of trading, the British Business Bank’s Start Up Loans programme (loans from £500 to £25,000 at interest of 6% per annum) may be more suitable.

Visit startuploans.co.uk for more information.

Companies that have received funding through EIS are in principle eligible for support from CBILS, provided that they satisfy the other eligibility criteria of the Scheme.

Further education establishments are in principle eligible, provided that they satisfy the other eligibility criteria of the Scheme.

Note: Further education establishments are exempt from the requirement that 50% of the applicant’s income must be derived from its Trading Activity.

Charities are in principle eligible, provided that they satisfy the other eligibility criteria of the Scheme.

Note: Registered Charities are exempt from the requirement that 50% of the applicant’s income must be derived from its Trading Activity.

Housing associations are in principle eligible, provided that they satisfy the other eligibility criteria of the Scheme.

Financial Services firms are in principle eligible, including non-bank financial institutions, (secured and unsecured lenders); FCA-regulated financial intermediaries (such as credit brokers, finance houses, equipment renting/leasing businesses, financial intermediation firms); and firms that offer independent financial advice/services on financial matters (for instance accountants, auditors, mortgage brokers), provided that they satisfy the other eligibility criteria of the Scheme.

However, deposit-taking banks, building societies and insurers writing contracts of insurance as principal are not eligible for CBILS.

Business, employer, professional, religious or political membership organisations or trade unions are in principle eligible, provided that they satisfy the other eligibility criteria of the Scheme.

If the organisation is classified as a public-sector organisation by the Office of National Statistics, it is not eligible for CBILS.

Export businesses are in principle eligible, provided that they satisfy the other eligibility criteria of the Scheme. For asset finance and invoice finance under £30,000, the facility cannot be used for certain activities outside of the UK. A borrower may self-certify the loan isn’t going to be used for these purposes.

Yes, it does. This would be a UK trading activity even if the company’s income comes wholly or mainly from exporting.

An SME which is foreign-owned is in principle eligible to apply for CBILS, provided it is trading in the UK (not just selling into the UK and has the core of its business operations in the UK) and uses the CBILS facility to support its business activity in the UK. The same is true for an SME which has UK ownership but is registered abroad.

If it derives more than 50% of its income from commercial activity that generates turnover, whether or not this is with the intention of making a profit. This includes real-estate SMEs that derive income from property (including real-estate investment companies and housebuilders).

If a business has a private equity investor, even where that investor holds a majority or controlling stake, they can still be eligible for CBILS, provided that they satisfy the other eligibility criteria of the Scheme.

When assessing the £45 million turnover eligibility threshold, the business will be considered separately to the private equity investor, and its other investments. If the business’s turnover is below that threshold, they can be eligible for the CBILS, provided they meet the other eligibility criteria.

To determine the maximum amount available to a business under CBILS, the business is treated as standalone from its private equity investor, and the other businesses it may have invested in. Therefore the £5 million maximum loan size applies to that business only.

Yes, as long as you meet the scheme’s eligibility criteria. Any previous de minimis State aid does not impact your eligibility for CBILS and the lender does not need to take it into account.

CBILS operates as a notified scheme rather than under de minimis, as EFG did. There is no interaction between any de minimis State aid a business previously received and the size of the CBILS facility it can access, should it be eligible.

Yes. You will still be eligible for a loan but certain payments you receive may count towards the amount of Business Interruption Payment (BIP) – the payments the UK Government will make to cover interest and fees on your loan – you will be entitled to. In this instance, these payments are made under the Temporary Framework for State Aid measures to support the economy in the current Covid-19 outbreak.

When applying for a CBILS loan you will need to confirm that you (including any business in your group and any business under common control) have not received more than £711,200 (€800,000) in State aid under the State Aid Temporary Framework (or £106,680 (€120,000) in the case of businesses operating in the fisheries and aquaculture sector, or £88,900 (€100,000) in the case of businesses operating in the primary products of agriculture sector). If you have received aid under another Temporary Framework scheme you will have been informed as to the amount in your scheme documentation.

A business or undertaking in difficulty includes:

• Individuals or companies that have entered into collective insolvency proceedings;
• Limited companies which have accumulated losses greater than half of their share capital in their last annual accounts (this does not apply to SMEs less than 3 years old ^{Read footnote text 10} );
• Partnerships, limited partnerships or unlimited liability companies which have accumulated losses greater than half of their capital in their latest annual accounts (this does not apply to SMEs less than 3 years old);
• Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee, or has received restructuring aid and is still subject to a restructuring plan;
• A company which is not an SME where, for each of the last two accounting years: i) your book debt to equity ratio has been greater than 7.5; and ii) your EBITDA interest coverage ratio has been below 1.0.
  From 30 July 2020, the business in difficulty test does not apply to micro or small businesses. Micro and small businesses are businesses that have fewer than 50 employees and less than £9,000,000 in annual turnover and/or annual balance sheet total. However, to be eligible to the Coronavirus Schemes, micro and small businesses must not be (a) subject to collective insolvency procedure under national law, or (b) in receipt of rescue aid (which has not been repaid) or restructuring aid (and are still subject to a restructuring plan) at the time they apply for a scheme facility.

New guidance issued on 25 September 2020 allows for the ‘undertaking in difficulty’ assessment to be determined at the date of application for a scheme facility. This means that a business that was an ‘undertaking in difficulty’ on 31 December 2019 but, at the date of application for a scheme facility, is no longer an ‘undertaking in difficulty’ will now be (in principle) eligible for the scheme.

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  SMEs are defined as a business with less than 250 employees and either (a) a turnover of less than £44.45m or (b) a balance sheet of less than £38.22m.

he definition of an undertaking in difficulty includes businesses which have accumulated losses greater than half of their share capital.

For a limited liability company, this is where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital.

These are as defined by the Commission Regulation (EU) 2015/848 of 20 May 2015, rather than the definition of “insolvency proceedings” in the Insolvency Act 1986. This means:

• winding-up by, or subject to the supervision of, a court
• creditors’ voluntary winding-up (with confirmation by the court)
• administration
• voluntary arrangements under insolvency legislation
• bankruptcy or sequestration

The “voluntary arrangements” above include company and individual voluntary arrangements.

Receiverships, members’ voluntary liquidations and schemes of arrangement (under Part 26 of the Companies Act 2006) are not included.

There is no official guidance from the European Commission on what this means. However, if a borrower is the subject of any of the proceedings listed above, or is not subject to any insolvency proceedings, but meets the criteria above, the borrower should be categorised as an “undertaking in difficulty”.

Rescue or restructuring aid is normally the subject of a specific State aid approval from the European Commission. For the avoidance of doubt, aid provided under the Enterprise Finance Guarantee Scheme is not rescue or restructuring aid.

This can include self-employed people; family businesses; and partnerships or associations regularly engaged in an economic activity. It also includes medium-sized business that employs fewer than 250 people and has an annual turnover of no more than £45 million.

A business that is not an SME will be in difficulty if, for the previous two years, the business’s book debt to equity ratio was greater than 7,5; and its EBITDA interest coverage ratio was below 1.0. A business must meet both of these ratios for both years to be classed as “in difficulty”.

SMEs are not required to meet these solvency ratios.

An undertaking is a single economic unit, which may be an individual entity or a group of entities. Depending on your business, lenders may consider it appropriate to apply the test on an individual or a group basis.

The accumulated losses test does not apply if the business is an SME that, on the date of assessment, had existed for less than three years; or is a trust or unincorporated association.

For asset finance and invoice finance facilities under £30,000, the “undertaking in difficulty” test (or the alternative test for micro/small businesses) does not apply as a facility of this level is considered to involve a de minimis amount of State aid.

If a charity or non-profit organisation provides goods and services and is a limited liability company or an unlimited liability company, the test should be applied as with other companies. Where it undertakes its activity through a subsidiary, the tests should be applied on a group basis. If it is a trust or unincorporated association, the accumulated losses test does not apply.

For existing users of the EFG Scheme, nothing has changed. If you wish to apply for a financing facility, your lender will be able to assess if you are eligible under CBILS.

CBILS is a new scheme. It is different from EFG in a number of ways.

• There is no guarantee fee for SMEs to use CBILS. Under EFG, the borrower paid a guarantee fee.
• The Government will make a Business Interruption Payment to cover the interest and any lender-levied fees in the first 12 months of any CBILS facility.
• This means smaller businesses will benefit from no upfront costs and lower initial repayments.
• The maximum facility provided under CBILS will be up to £5 million. Under EFG, this was £1.2 million.

Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but they exclude the Principal Private Residence (PPR), and 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. For all facilities, including those over £250,000, CBILS can support lending to smaller businesses even where a lender considers there to be sufficient security. Where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility. A borrower’s/guarantor’s Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL-backed facility.

• Access to CBILS has been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. Insufficient security is no longer a condition to access the scheme, which it was for EFG.
• CBILS is available to businesses with an annual turnover of no more than £45 million. EFG was available to businesses with annual turnover of no more than £41 million.

If you have a query about an active EFG facility, you should approach your own provider – ideally via their website, and not through the British Business Bank.

Any request for refinancing an existing EFG facility will be:

• at each individual lender’s discretion
• subject to certain limits, and you meeting the CBILS eligibility criteria

If you have a query about an active EFG facility, you should approach your current provider – ideally via their website, and not through the British Business Bank.