Today the British Business Bank has announced that it has approved four new lenders for accreditation under the Coronavirus Business Interruption Loan Scheme (CBILS) – The Co-operative Bank, Cynergy Bank, OakNorth Bank and Starling Bank.
Following their approval, each lender will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving CBILS applications from smaller businesses across the UK.
More than 80% of the UK’s smaller businesses have a finance relationship with the 40+ existing CBILS accredited lenders. The British Business Bank is accelerating the onboarding of new lenders to further extend the scheme’s reach and has significantly increased the size of its accreditation team to manage the volume of interest.
The Bank is reviewing applications from a wide range of lender types – from PRA-regulated banks, to platform lenders, debt funds, invoice finance lenders, asset finance lenders and responsible finance lenders.
About the scheme
The Coronavirus Business Interruption Loan Scheme, delivered through 40+ British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
The scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.
Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years.
No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80% gross) against the outstanding facility balance, subject to an overall cap per lender.
No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
Security: 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 business interruption payment.
The borrower always remains 100% liable for the debt.