CBILS terms expanded to offer relief to more SMEs

The conditions of the coronavirus business interruption loan scheme (CBILS) have been expanded to allow more small- and medium-sized enterprises (SMEs) to access government-backed funding.

From today (30 July), businesses which have been classed as having ‘undertakings in difficulty’ will be allowed to apply for CBILS loans of up to £5m. This includes businesses with fewer than 50 employees and less than £9m in annual revenue.

Previously, these businesses were unable to access the scheme due to restrictive rules around state aid, which were set out by the European Commission before the coronavirus pandemic.

Read more: Institutional funding drought hits CBILS participation

“Our loan schemes have been a key part in supporting businesses enabling them to bounce back as we kick start the economy,” said economic secretary to the Treasury, John Glen.

“I’m delighted that our work with the [European] Commission has paid off so we can further support the smallest businesses.”

The government has stated that it expects lenders to make changes in approvals processes, and it is hoped that these changes will particularly benefit smaller businesses.

“We have stood by business throughout this crisis, and today’s announcement will mean that even more small firms will be able to access much-needed financial support,” said the small business minister Paul Scully.

Read more: P2P lenders call for restructure of government emergency loan schemes

“Small businesses will play a vital role as we seek to recover our way of life and get the economy moving again, and it is essential we continue to support them through this difficult period.”

To date, approximately £12.6bn has been delivered to more than 57,000 businesses via CBILS providers. These providers include peer-to-peer lenders such as Funding Circle and Assetz Capital.

“This change will make a real difference for those smaller, viable businesses who had previously struggled to secure loans under the schemes because they were deemed to be ‘undertakings in difficulty’,” said Stephen Pegge, managing director of commercial finance at trade body UK Finance.

“Lenders will now be able to help more viable business secure the finance they need and will continue to engage with their commercial customers and assess any new lending applications against the revised rules.”

Read more: P2P lenders call for CBILS extension