Government further expands new loan scheme to support more businesses

06/04/2020

The government has announced a significant expansion to the Coronavirus Business Interruption Loan Scheme (CBILS), effective Monday 6th April.

The scheme was introduced to help businesses who are struggling financially due to the effects of the current COVID-19 pandemic to access vital funding to support cash flow.

Under the scheme, eligible businesses can apply to borrow up to £5 million from lenders in the form of a loan, overdraft, invoice finance or asset finance. The government is guaranteeing up to 80% of any losses incurred to encourage them to lend more freely, and paying the first 12 months’ interest on the loan as well as any arrangement fees.

But after initial criticism, the government has acted quickly to increase eligibility.

What new measures have been introduced?

The changes to the scheme have been made in the hope that more business will be able to rely on it. This includes opening up the scheme to all small businesses, rather than just those who lacked sufficient security and are unable to secure commercial finance otherwise.

The changes include:

• Lenders are no longer able to request a personal guarantee for loans under £250,000
• For loans over £250,000, personal guarantees will be limited to 20% of any amount outstanding after other recoveries from business assets (and still cannot include directors ‘Principal Private Residences’ (PPR))
• Insufficient security is no longer a condition to access the scheme
• Lenders are no longer required to offer lending on normal commercial terms where possible, before making use of the scheme
• Operational changes to the scheme are to be made by banks to speed up lending

It is hoped that these changes will increase the number of businesses who are eligible to benefit from the scheme.

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Why are these new measures needed?

As the COVID-19 pandemic continues to disrupt daily life, many businesses are feeling the strain. These measures aim to give businesses access to much needed capital that they can use to keep themselves afloat during this period.

As time goes on, more and more businesses will find themselves looking to lenders and banks for support, and with the CBILS scheme, the government hopes to ensure that this support is available to as many businesses as possible.  

If you find yourself needing to access commercial finance, we can help. To speak with one of our funding experts, call 0800 9774833 or request a call back at a convenient time using the form below.

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