Government announces the new Coronavirus Large Business Interruption Loan Scheme (CLBILS)

It 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 that have been impacted by Covid-19 and which are unable to secure regular commercial financing.

The new CLBILS will ensure that more firms are able to benefit from Government-backed support during this difficult time. This will give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS. 

Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later in April.

The Government expects 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, but this scheme allows them specifically to support businesses that were viable before the COVID-19 outbreak but are facing significant cash flow difficulties, that would otherwise make their business unviable in the short term.

The new scheme will launch later this 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 take out.

Eligibility

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; and

have a borrowing proposal which the lender:

would consider viable, were it not for the COVID-19 pandemic; and

believes will enable you to trade out of any short-term to medium-term difficulty.

You will not be eligible if your business falls into any of the following categories of trades and organisations:

banks and building societies;

insurers and reinsurers (but not insurance brokers); 

public-sector organisations, including state-funded primary and secondary schools.

Further information

Limited information on the scheme is available HERE.

Further details are expected later this month, when the scheme will be launched.

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.

UPDATE: 22 April 2020

The scheme opened on Monday 20 April 2020. You can read our more detailed article on the scheme HERE.

You can also read our article on the £250m Future Fund to support start-ups and growth companies, announced on 20 April 2020, HERE.

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