Coronavirus Large Business Interruption Loan Scheme

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides financial support to mid-sized and larger UK businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.

Specifically, it facilitates access to finance for businesses with a turnover above £45 million, the upper limit for the existing smaller-business focused Coronavirus Business Interruption Loan Scheme (CBILS).

How does CLBILS work?

CLBILS is available through a range of British Business Bank accredited lenders and partners, these are listed on the British Business Bank website HERE.

A lender can provide:

  • up to £25 million to businesses with turnover from £45 million up to £250 million
  • up to £50 million to businesses for those with a turnover of over £250 million

Please note on 19 May HM Treasury announced changes to the Coronavirus Large Business Interruption Loan Scheme, including that larger businesses will benefit from loans up to the lower of 25% of turnover, or £200m. The changes are expected to go live on 26 May and full details will be available on that date. Read more HERE

Finance is available in the form of:

  • term loans
  • revolving credit facilities (including overdrafts)
  • invoice finance
  • asset finance

There are a number of important differences in a CLBILS backed product to that of a CBILS backed one, including:

  • Unlike CBILS the Government will not cover the interest and any lender-levied fees in the first 12 months of any CBILS facility so commercial rates of interest will be charged
  • The maximum repayment term is 3 years; minimum term 3 months.
  • Lender and borrower are still free to enter into loan agreements outside of CLBILS — for example where there is no economic benefit to the borrower of taking out a CLBILS loan over normal commercial lending

CLBILS gives the lender a government-backed partial guarantee (80%) against the outstanding balance of the facility. The borrower remains fully liable for the debt.

Personal Guarantees - Under the scheme, personal guarantees of any form will not be taken for facilities below £250,000. For facilities above £250,000, personal guarantees may still be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.

Eligibility

Your business should be:

  • Be UK-based in its business activity
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19)
  • Not have received a facility under the Bank of England’s COVID-19 Corporate Financing Facility (CCFF)

What will lenders need to see?

When you apply for a business loan, most lenders will ask you for the following:

  • The amount you would like to borrow
  • What the money is for — the lender will check that it’s for a suitable business purpose and the right type of finance for your needs
  • The period over which you will make the repayments — the lender will assess whether the loan is affordable for you

What documentation will you need to have available?

It is likely that you will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include the following:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

Nunn Hayward can help with the preparation of these, please contact us on 01753 888211 or email info@nhllp.com for further guidance.

The scheme is a part of a wider package of government support for UK businesses and employees. Read more at the Government’s Business Support website HERE