The scheme is a part of a wider package of government support for UK businesses and employees. You can read more on the Government’s Business finance and support webpages here.

CLBILS is designed to support mid cap and larger businesses, with an annual turnover of over £45 million, that don’t meet a lender’s normal lending requirements for a fully commercial loan or other facility, but which are considered viable in the longer-term.

These businesses would not be eligible for the existing scheme for smaller-businesses with annual turnover up to £45 million - the Coronavirus Business Interruption Loan Scheme (CBILS) described in our article here.

How CLBILS works

Similar to the CBILS, CLBILS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website here.

Maximum value of a facility. A lender can provide:

• up to £25m to a business with turnover from £45m up to £250m; and

• up to £50m to a business with a turnover of over £250m.

In each case the amount borrowed should not be greater than:

•  double the borrower’s annual wage bill for the most recent year available; or

• 25% of the borrower’s total turnover for the most recent year available; or

• with appropriate justification and based on self-certification of the borrower, the amount may be increased to cover their liquidity needs for the next 12 months.

Finance terms are from three months to three years. It is available in the form of: term loans; revolving credit facilities (including overdrafts); invoice finance; and asset finance.

Similar to the CBILS:

• CLBILS gives the lender a government-backed partial guarantee (80%) against the outstanding balance of the facility (although this includes interest and fees), subject to an overall portfolio cap;

• the borrower remains fully liable for the debt;

• personal guarantees of any form will not be taken for facilities below £250,000; and

• for facilities above £250,000, personal guarantees may still be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.

Unlike the CBILS the Government will not cover interest and lender-levied fees and there is no restriction on a Principal Private Residence being taken as security.

Eligibility

Your business must:

• be UK-based in its business activity;

• have an annual turnover of more than £45 million, 50% of which must be generated from trading activity;

• have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty;

• self-certify that it has been adversely impacted by the coronavirus (COVID-19); and

• not have received a facility under the Bank of England’s Covid Corporate Financing Facility (CCFF).

A lender will need further information to confirm eligibility. Lending can only be agreed where a lender reasonably believes:

• the finance will help them trade out of any short-to-medium term cashflow difficulties; and

• if the facility is granted, the borrower is not expected to go out of business in the short-to-medium term.

Businesses from these sectors are not eligible: credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), insurers and reinsurers (but not insurance brokers); building societies; public-sector bodies; further-education establishments, if they are grant-funded; and state-funded primary and secondary schools.

How to access the scheme

Again similar to CBILS, choose an accredited lender (link above) and approach it yourself, ideally via the lender’s website, which will provide details of which type of finance that lender is making available under the scheme and the amount of finance offered.

When you apply the lender is likely to ask you for details of the loan and supporting documents.

The lender has the authority to decide whether to offer you finance. If one lender turns you down, you can still approach other lenders within the scheme.

Further information

Information on the scheme is available on the British Business Bank website here.

You can read our article on The Coronavirus Business Interruption Loan Scheme (CBILS) for SMEs here.

You can read our article on The COVID-19 Corporate Financing Facility, providing financial support for larger firms here.

You can read our article on the £250m Future Fund to support start-ups and growth companies here.

If you have any queries regarding this matter please contact either of the authors or another member of the Corporate team.