Update on the Coronavirus Business Interruption Loan Scheme

Update on the Coronavirus Business Interruption Loan Scheme

Updated 3 April 2020

Welcome changes to the CBILS have been announced by HM Treasury.

Those that can access the scheme

The restriction that CBILS was not available to a business if a lender could offer finance on “normal commercial terms” has been removed. Specifically a business no longer has to demonstrate that it has insufficient security (business and personal) to access the scheme.

Personal guarantees

The requirement for personal guarantees was both slowing down the loan application process and, more importantly, was a significant deterrent for business owners to take on new loans with these additional personal risks during these times of great uncertainty. The conditions of the scheme have been update

  • No personal guarantees for facilities under £250,000. The Treasury used the word “banned”.
  • Personal guarantees may still be required, at a lender’s discretion, for facilities above £250,000, but they exclude the Principal Private Residence (PPR) and 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.

We hope that lenders will use their discretion wisely.

The government will continue to cover the first twelve months of interest and fees.

Following this announcement the major change that is now needed is for lenders to look for a reason to lend rather than a reason not to.

If you have concerns or questions, please contact us on 01932 830664 or through your usual client partner contact. As further details are announced, we will keep you informed.

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About the author

Richard Hayward is a WardWilliams partner who advise clients of the latest rules and regulations.