The new Coronavirus Large Business Interruption Loan Scheme CLBILS will provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.
This will give banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.
It’s expected that the scheme to be delivered through commercial lenders. The government will provide lenders with an 80% guarantee on individual loans for businesses that would be otherwise unable to access the finance they need.
Lenders will still be expected to conduct their usual credit risk checks. This scheme allows lenders to specifically support businesses that were viable before the COVID-19 outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.
The new scheme will launch later in April and will support a wide range of businesses to access finance products including short term loans, overdrafts, invoice finance and asset finance.
Businesses would remain responsible for repaying any facility they may takeout.
To be eligible, your business must:
- be UK-based in its business activity
- have an annual turnover between £45 million and £500 million
- be unable to secure regular commercial financing
- has not received support under the Bank of England’s COVID-19 Corporate Financing Facility (CCFF)
- have a borrowing proposal which the lender:
- would consider viable, were it not for the COVID-19 pandemic
- believes will enable you to trade out of any short-term to medium-term difficulty
Businesses from any sector can apply, except for the following:
- banks and building societies
- insurers and reinsurers (but not insurance brokers)
- public-sector organisations, including state-funded primary and secondary schools
Further detail on eligibility will be confirmed later this month.
What can you get
You can apply for:
- revolving credit facilities (including overdrafts)
- invoice finance
- asset finance
A lender can provide up to 25% of you annual turnover. The maximum amount you can borrow is £200 million.
How to apply
There are 12 lenders taking part in the scheme including all the main retail banks. You should approach a suitable lender yourself via the lender’s website.
You’ll need to tell the lender:
- the amount you’d like to borrow
- what the money is for
- how long you’d like to pay it back
Support for larger firms through the COVID-19 Corporate Financing Facility
As well as the Coronavirus Large Business Interruption Loan Scheme (CLBILS), under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
All non-financial companies that meet the criteria set out on the Bank of England’s website are eligible.
How to access the scheme
The scheme is now available for applications.
More information is available from the Bank of England.