Good news for small businesses applying for CBILS Government Loans

29 July 2020 - Elizabeth O'Hanlon

One of the initiatives created by the government to help businesses get through the Covid-19 crisis is the Coronavirus Business Interruption Loan Scheme (or CBILS). The scheme aims to help small and medium sized businesses to access loans and other kinds of finance of up to £5 million, and the government guarantees 80% of the finance to the lender, plus they will pay any interest and fees for the first twelve months of the loan.
 
Loans are available through over ninety lenders, including all the main high street banks and building societies, and you should look at their website to apply for a loan.  

After a slow start, and accusations of inflexibility, the scheme has taken off, and in excess of £12.2 billion has now been lent (www.gov.uk 19.07.2020). 

Who can apply?   

  • Your business needs to be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • You will need to self-certify that your business has been adversely impacted by the coronavirus (COVID-19)
  • You have not been classed as a “business in difficulty” on 31 December 2019, if applying to borrow £30,000 or more

What has changed? 
From 30 July, the classification of criteria for a “business in difficulty” has changed. The new amendment means that smaller businesses with fewer than 50 employees and less than £9,000,000 in annual turnover and/or annual balance sheet will not be considered “undertakings in difficulty” unless they are:

  • subject to collective insolvency procedure under national law
  • in receipt of rescue aid (which has not been repaid) or restructuring aid (and are still subject to a restructuring plan)

Smaller businesses with more than 50 employees or more than £9 million annual turnover and/or annual balance sheet will still be subject to the ‘Undertaking in Difficulty’ test as defined by the European Union. More information these definitions is available on  www.british-business-bank.co.uk.

Applicants will still need to determine their turnover and number of employees in line with Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises.

Sarah Healey Pearce, Business Advisory Director commented: “This is good news for many SMEs who under the previous regulations would have been automatically excluded from accessing CBILS loans, and we anticipate an increase in enquiries as a result of this change.”

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