Since publishing this blog further updates to the scheme have been announced. Please view our latest blog here.

Today Chancellor Rishi Sunak announced an extension to the Coronavirus Business Interruption Loan Scheme (CIBLS) and an additional loan scheme for larger businesses.

After feedback from the business community and political spheres around the speed at which the current scheme was getting money to the businesses that need it, there have been some significant amendments to the current CIBLS.

To date, approximately 130,000 loan applications had been made under the scheme, yet only 1,000 approved. The key sticking point being that the government-backed loans for small businesses were only available to firms that had been turned down for a commercial loan from their bank. Therefore, many applicants were being steered towards taking out commercial loans that can have interest rates of up to 30%. This has now been removed and the scheme is now open to all viable businesses and not just those who couldn’t secure a commercial loan.

What are the key updates?

• All viable businesses will be able to access the loan scheme
• The UK Government will provide lenders with a guarantee of 80% on each loan
• The UK Government will make a Business Interruption Payment to cover the first 12 months of interest payment and any lender-levied fees
• For loans over £250,000, Personal Guarantee’s will be limited to just 20% of any amount outstanding on the CBILS lending after any other recoveries from business assets. Banks will look to put these in place at their discretion. This update will also apply to those loans already made available under the scheme.

Find out more on the Government’s website.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

This second business interruption loan scheme has been announced and is available for larger businesses who have been affected by the Coronavirus pandemic. It is expected to launch later in April.

This is fundamentally the same scheme as the initial CBILS, however there are some key eligibility differences.

• Loans are made available up to £25m
• Firms must have a turnover between £45m and £500m

Find out more on the Government’s website.

How to apply and more information

For more information on the CBILS we've prepared a comprehensive blog detailing the information banks will need to process your application as well as further options you could consider with your bank now. You can read this blog about CBILS and other cash flow considerations here.

If you are affected by the above or would like further information, please do not hesitate to get in touch with me, or your usual Johnston Carmichael contact.