WHATS BETTER ABOUT THE CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
WHAT WE ARE SEEING
We have seen numerous comments on social media and from directors with regards to the Coronavirus Business Interruption Scheme Loan Scheme (CBILS) not providing guarantee to "good directors", when they have to personally guarantee the lending,. As well as many surprised that security or personal guarantees are even requested.
The truth of the matter is, this was announced by the Chancellor in the Budget 2020 as a scheme to temporarily replace the Enterprise Finance Guarantee (EFG) Scheme.
Both are government backed lending schemes, in which the lenders can seek personal guarantees and security.
The government back guarantee is for the lender, not the business. The guarantee is designed to facilitate the lending by banks in uncertain times, giving them more confidence to do so.
This is also a loan or overdraft, and there is a responsibility for the finance to be repaid by the business (just like any finance facility). If a business is later unable to repay the finance the lender has a duty to pursue all options to recover the monies, including from directors personally where personal guarantees are given. The government guarantee will only take effect when the lender is unable to recover the funds.
SO WHAT ARE THE IMPROVEMENTS?
As mentioned the scheme temporarily replaces the EFG Scheme, but with added benefits. These are:
In conclusion, the CBILS is an Improved version of the EFG.
For further details on CBILS see our COVID-19 HUB at https://www.lminsolvency.co.uk/funding--support-for-businesses-effected-by-covid-19.html
Lucinda Matkin - Licensed Insolvency Practitioner & Chartered Accountant