Coronavirus Business Interruption Loan Scheme

Banks and other finance providers recognise that the cashflow of small and medium sized businesses may be disrupted by the impact of Covid-19. The banking and finance industry is committed to supporting viable businesses in continuing to trade through these uncertain times. Banks and lenders remain open for business and are well placed to assist all businesses, including sole traders and SMEs, looking for support.


The Coronavirus Business Interruption Loan Scheme (CBILS) was announced by the chancellor as part of a series of government measures to support SMEs. Since the scheme’s launch on 23 March, the industry has worked with government and the British Business Bank to both enhance processes and widen the scheme’s eligibility. The scheme has been designed to help businesses manage their finances given the unprecedented situation many are currently facing. It aims to support those SME businesses that were trading successfully before Covid-19 but which may now experience lost or deferred revenues, or disruptions to their cashflow as a result of the current disruption.


This scheme is just one of a number of measures announced by government, more details of which can be found here.


What is the Coronavirus Business Interruption Loan Scheme?

The CBIL scheme provides lenders with a government-backed guarantee of 80 per cent on losses that may arise on facilities of up to £5 million. Under the previous scheme rules, lenders could only use the CBIL scheme in situations where they could not provide a facility under normal commercial terms. The CBIL scheme is now being expanded and will be available to viable businesses impacted by Covid-19, even if the lender would be prepared to offer the applicant a facility without the benefit of the CBIL scheme.

Lenders may require security for the facility, although where the facility is for less than £250,000, personal guarantees will not be taken. For facilities above £250,000, the taking of security is required although the taking of personal guarantees remains at the discretion of the lender (subject to limitations set out below). Previously businesses applying for facilities of over £250,000 under the CBIL scheme had to be assessed by lenders to establish “insufficient collateral” that would otherwise have qualified them for credit under normal commercial terms. This has now been removed as a requirement of the scheme, though lenders may still ask for this in line with their own credit policy when lending large sums of money. Primary Residual Property will never be taken as security for any CBIL facility.


The government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges.


How do I access the Coronavirus Business Interruption Loan Scheme?

The scheme is accessible through businesses’ normal points of contact with lenders. If businesses have concerns about their finances, they should contact their lender for support as early as possible. Given the high volumes of calls that all banks are receiving at the moment, including from vulnerable customers requiring immediate support, businesses may want to contact their lender online first. Lenders’ dedicated Covid-19 support pages will provide further information.

Businesses do not need to contact the British Business Bank to access this scheme. However, they may find some of the British Business Bank’s information on the scheme useful. This can be found here.


What are the criteria for businesses to be eligible for this scheme?

To be eligible for the scheme a business must be:

  • Able to confirm that it has been impacted by the coronavirus (COVID-19)

  • Based in the UK, with a turnover of no more than £45 million per annum

  • Seeking a facility up to £5 million

  • Must not be an “undertaking in difficulty” (more info below)

  • Operate within any business sector (Some different terms will apply for a small number of sectors, including for some agriculture, aquaculture and transport businesses)

  • Able to evidence viability (see below)


What if a business is viable but can’t get finance because of short-term disruption as a result of Covid-19?

Lenders will assess the viability of a business before Covid-19 disruption, accepting that there may be short-to-medium term performance impacts during the current environment. The scheme has been designed to help businesses manage their finances given the unprecedented situation many businesses are currently facing.

The scheme is designed to support those businesses that were trading successfully before Covid-19 but now face difficulties as a result of the current Covid-19 disruption. Lenders will have to assess that the business is viable, however they will be able to account for the exceptional concerns over the short-to-medium term business performance due to the impact of Covid-19. The finance should be deemed to be sufficient to enable a business trade through sho