An important update has come to light on the Coronavirus Large Business Interruption Loan Scheme (CLBILS) and Fund. On Thursday, 16 April 2020 the Chancellor of the Exchequer announced the scheme which has now become available with lenders.
Designed to support UK businesses losing revenue and seeing their cashflow disrupted as a result of the COVID-19 outbreak, the CLBILS provides finance to mid-sized and larger UK businesses with turnover above £45m.
The CLBILS supports the following:
– Term loans
– Revolving credit facilities (including overdrafts)
– Invoice finance
– Asset finance facilities
The scheme has specifically been designed to help lenders by giving them the confidence to provide funding through a partial guarantee of 80% of the outstanding facility balance.
Up to £50m facilities: Up to £50m for those with a turnover of over £250m, and of up to £25m for businesses with turnover from £45m up to £250m.
80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance.
Finance terms: Finance terms are from three months to three years.
Economic benefits go to the borrower: Borrowers will benefit from a proportionate reduction in pricing as a result of lenders receiving capital and risk benefits.
Personal guarantees: There are no personal guarantees permitted for facilities under £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20% of losses after all other recoveries have been applied.
The borrower always remains 100% liable for the debt.
There will be a new fund established to support the UK’s innovative businesses currently affected by Covid-19. This scheme will see an initial commitment of £250m of new government funding.
The scheme will open in May with initial plans for it to run until September. You can find more information about the scheme and how to apply to it on the UK government website.
Five new lenders for accreditation were recently announced by The British Business Bank: The Co-operative Bank, Cynergy Bank, OakNorth Bank, Starling Bank, and Funding Circle.
You can view the full list of accredited lenders on the British Business Bank website.
The British Business Bank has also updated its FAQs. Find out all you need to know now on their website.
If you want to read the full announcement, you can download it now. It includes further details about the CLBILS and the new future fund, as well as the full list of FAQs from the British Business Bank, should you want them to hand.
Don’t hesitate to get in touch with the Whyfield team. Alternatively, you will find more updates on funding and advice from us on our dedicated COVID-19 Resources page.