7 things to remember when you apply for CBILS

By Richard Mitchell
Content writer
Last update: 28 April 20201 minute read
7 things to remember when you apply for CBILS

Table of Contents

The Coronavirus pandemic is proving a massive threat to small businesses of all kinds. Many businesses, including pubs and shops, have been forced to close by the government, factories have had to shut because of a lack of customers and supplies - and many small businesses have had to furlough staff because there is no way for them to work.

The government is working to provide solutions for those businesses that are worst affected

An initial £330billion of guarantees will be made available, equivalent to 15% of UK GDP to help companies manage cash flow during this difficult period.

The Coronavirus Business Interruption Loan Scheme - CBILS - is a key part of these business support plans. 

It is aimed at helping small and medium-sized companies stay in business by allowing them to borrow up to £5m at preferential rates through the British Business Bank.

The Coronavirus Business Interruption Loan Scheme provides loans, rather than grants, which will be interest-free for 12 months, with the government promising to underwrite 80% of the loan should a business fail.

All viable small businesses affected by COVID-19 should be eligible, and CBILS supports a wide range of business finance products, including Term Loans, Overdrafts, Invoice Finance and Asset Finance. There are currently more than 40 lenders working within the CBIL scheme.

There is also a new Coronavirus Large Business Interruption Loan Scheme (CLBILS)  which will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.

But questions remain

To help business owners make sense of their options right now, what do they need to know?

1. Who will provide the loans?

The loans are not offered by the government themselves. Instead, the government will support commercial lenders who will offer the loans at commercial rates.

More than 40 lenders are currently able to provide funding under the scheme. They include the High Street Banks, Challenger Banks, Asset-based lenders and smaller specialist finance providers.

However, not all lenders will offer the full range of loans possible under CBILS, and not all will work with businesses in every sector. Many individual banks seem to only be providing CBILS to their own customers.

If you wish to apply for CBILS funding it is possible to go directly to a participating lender - but you may find that it is easier, faster and simpler to get expert support. Also, if you are declined by your bank, it is also worth approaching us for the help you need.

2. Who can have a loan?

Businesses from any sector can apply, except:

  • Banks, insurers and reinsurers
  • Public-sector bodies
  • Grant-funded Further Education establishments
  • State-funded primary and secondary schools

To  qualify for CBILS, a business must: 

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a business funding proposal which the lender would consider viable
  • Certify that it has been adversely impacted by the coronavirus
  • Generate more than 50% of its turnover from trading activity
  • Use the CBILS-backed facility to support trading in the UK

Sole traders and freelancers are eligible as long as their business activity is operated through a business account. Lenders may need further information to confirm eligibility.

If you are in any doubt about your eligibility for a loan under CBILS, we can help make things clearer.

3. What documentation do you need to apply?

A loan under CBILs will require a range of documentation, like any other commercial loan. As a minimum, you will need:

  • Your business’ latest end of year accounts
  • Your business’ latest management accounts (full P&L and Balance Sheet)
  • Cash flow statement showing the projected impact of COVID-19 over the next 3-6 months
  •  A borrowing proposal showing how your business will use the funds, and how it will generate funds to repay the loan

 You may also need to provide other documents as requested by the lender to support your application but these will vary between lenders. 

At Rangewell we work with lenders on a daily basis and we understand the documents that each require. This means that by applying through Rangewell, you may be able to speed up the process of applying.

4. How quickly can funding be made available?

Demand for funding is high and many banks and other lenders are overwhelmed by the numbers of applications they are suddenly dealing with.

In many cases, it has taken an entire working week for the bank to arrange to take down details of the business before starting an application. The time taken to arrange a loan will be much longer, and some lenders believe that 4-5 weeks will be required to process loans under their usual procedures. 

This may simply be too long for your business to wait, particularly if your funding need is urgent. It may take weeks to know whether or not your application has been successful, and another wait before funds can be made available.

At Rangewell we can speed up the application process for you - by approaching those lenders we know will be able to move the fastest. This could be crucial for getting the funds you need in time to save your business.

5. Does CBILS require a personal guarantee?

The government has set up CBILS to provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims). This is to encourage the bank to lend in situations where there may be questions over the security provided or the viability of the business.

However, as the borrower, you will remain 100% liable for the debt. The Big Four banks have agreed that they won’t take personal guarantees as security for lending below £250,000 under CBILS

Getting a loan under CBILS may be something that you are forced to do by circumstances, but it is important to understand the options available, and all the obligations that you are putting yourself under. At Rangewell we can work with you to explain the terms and conditions, and show you what alternatives there may be available. 

6. When will you start paying interest? 

The ability to borrow a substantial sum without making any interest payments for the first year is a major part of the appeal of CBILS. 

The government will make a Business Interruption Payment to cover the first 12 months of your interest payments and any charges set by the lender, so your first year is indeed interest-free. 

You can spread repayments of your loan from 1 to 6 years.

However, from year 2 onwards, you’ll have to pay significant interest rates. Lenders are free to set their own levels and, in some cases, this can mean interest rates - and repayments - are very high indeed, and which would not be considered under normal circumstances.

It is essential to get a deal agreed which will support your company’s survival - not threaten its downfall. At Rangewell we will work with you to ensure that the terms and conditions of your CBILS loan are fair and the interest rates are affordable. 

7. You can get help

It is possible to go directly to a lender for the finance you must have, but as we have shown, it may not be the best solution for your needs.

Getting an impartial business funding expert working with you may be a better answer, helping you get the money you need faster - and to pay less for it.

At Rangewell we want to help you help your business survive. We can do that in many ways.

  • We can help find the most appropriate funding under CBILS
  • We can help you make your application and negotiate with lenders on your behalf
  • We can help you secure the most competitive rates - potentially saving you £ thousands in the long term, as well as providing the short-term funding solutions you need to save your business
  • If you aren't eligible for CBILS you may still be eligible for other forms of finance - and we can help you with that too. 

At Rangewell we help secure all types of funding for all types of business – and during the current crisis we can provide the quickest way to find the funding you need.

Call us now – our experts are ready to help you with your finance problems during the coronavirus crisis.

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