Emergency business loan scheme has been revamped

Changes have been made to the coronavirus business interruption loan scheme (CBILS) so more smaller businesses impacted by the pandemic can access funding.

CBILS received staunch criticism after it emerged that high street banks were demanding personal guarantees from business owners and were directing potential borrowers to other types of loans.

Access to the scheme has now been opened up to those smaller businesses who would have previously met the requirements for a commercial facility but would not have been eligible for CBILS.

And personal guarantees of any form cannot be taken under the scheme for any facilities below £250,000.

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“It was essential to get the coronavirus business interruption loan scheme up and running as quickly as possible to get additional funding flowing to smaller business,” said Keith Morgan, chief executive, British Business Bank.

“We have seen an incredible demand for CBILS since it launched, so opening up access to the scheme to even more smaller businesses across the UK will enable lenders to expand their support, deploying vital funding where it is most needed.”

Personal guarantees for facilities above £250,000 may still be required, at a lender’s discretion.

But recoveries under these are capped at a maximum of 20 per cent of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.

A Principal Private Residence cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.

For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the loan.

Since CBILS launched less than two weeks ago, almost 1,000 facilities valued at £90.5m have been approved by lenders accredited to the British Business Bank’s CBIL Scheme.

More than 80 per cent of the UK’s smaller businesses have a finance relationship with CBILS accredited lenders.

The British Business Bank said the number of providers of the scheme will continue to grow and new alternative finance lenders will continue to be accredited to the scheme creating more choice and diversity of supply for smaller businesses.

This follows the expansion of eligibility criteria which means that P2P lenders can now apply to participate in the scheme.