THE HEADLINESTHE ANNOUNCEMENT
On 3 April 2020 the chancellor announced an extension of the Covid-19 Business Interruption Loan Scheme ("CBILS") to support larger companies that fall in the gap between the CBILs scheme supporting those with annual turnover unto £45 million per annum and those support through the Covid Corporate Financing Facility) CCFF, which are of investment grade.
As such the Scheme is aimed at supporting large sized Enterprises with a turnover between £45 million and £500 million per annum to access loans, overdrafts, invoice finance and asset finance of up to £25 million
In contrast to CBILS interest will be payable at commercial rates.
WHAT THE SCHEME OFFERS
Each lender will have there own criteria, but to eligible to apply your business must meet the following;
WHENLaunched April 2020
GOVERNMENT BACKEDGovernment will be providing lenders with a partial guarantee of 80% on each loan to give lenders the confidence to provide finance to SMEs. The guarantee is not for the business, as such the business (and its directors) remain responsible for repaying the finance.
Under CBILS The scheme has been updated so that personal guarantees cannot be requested for lending below £250,000 (await confirmation the same applies for CLBILS).
For facilities above £250,000 lenders may request personal guarantees, whereby the directors are personally liable for repaying the loan if the business is unable to do so.
Security (usually by way of a debenture or floating charge) this could be security of business assets or personal assets but the directors primary residential property is excluded.
IMPORTANT - CAUTIONARY NOTE: The business and directors are responsible for repaying the loan. The borrower always remains 100% liable for the debt.
Directors may need to provide a personal guarantee or security (of company or personal assets, but not Primary Residential Property).
If the business cannot repay the loan, the directors may be personally liable. The lenders have a duty to pursue all options to recover the funds before calling on the government backing.
LENDERSA list of accredited lenders will be published on the British Business Bank Website.
Click here for a full list of lenders, that can be searched /filtered by type of lending and region >
Like any loan application, lenders will require wealth of information, which will vary depending on the type of finance and the terms of the finance offered, but is likely to include;
HOW TO APPLY
REPAYMENT AND FEESUnder this scheme Interest and capital repayments will commence immediately. There is no interest free period or repayment holiday.
IMPORTANT - CAUTIONARY NOTE: You will however have capital and interest repayments that will start as soon as you have taken the finance, with loan repayments starting as early as 30 days from commencement of the loan.
Therefore, remember you will need to factor capital plus interest repayments into your cash flow forecasting from the start of the loan repayments. Making sure you can service the loan in an uncertain time will mean you need to consider a number of scenarios for future trade depending on how long the pandemic may last.
FURTHER GUIDANCESee government link https://www.gov.uk/government/news/chancellor-expands-loan-scheme-for-large-businesses?utm_source=e1eae5d2-6726-4b01-a7b4-29c502d3659a&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate
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