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COVID-19 Information Hub

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

In his announcement on Friday 20 March, the Chancellor announced the original government-backed loan guarantee scheme revealed in the Budget to address the cash flow issues faced by businesses. The government will now provide loan guarantees up to “an initial” £330 billion for all sizes of businesses. This was expanded further on 3 April to include new measures aimed at larger businesses with a turnover of up to £500m. The revamped Scheme will offer government-backed loans of up to £25m to firms with revenues of between £45m and £500m.

The enhanced larger-company Scheme goes live on Monday 20 April.

Please read on for a summary of advised issued by the government and our own supplementary commentary, analysis and guidance.

Updated 20/04/20

Government guidance:

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) will support large businesses, with an annual turnover of over £45 million.

All viable businesses with a turnover of more than £45 million per year will be able to apply for up to £25 million of finance. Firms with a turnover of more than £250 million will be able to apply for up to £50 million of finance.

The Scheme will be available through a series of accredited lenders, which will be listed on the British Business Bank website. The government will provide lenders with an 80% guarantee on individual loans. This will give banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.

This Scheme allows lenders to support businesses that were viable before the coronavirus outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.

Eligibility

You’re eligible if:

  • your business is based in the UK
  • your business has an annual turnover of over £45 million
  • you can self-certify that your business has been adversely impacted by coronavirus
  • your business has not received a facility under the Bank of England’s COVID-19 Corporate Financing Facility (CCFF)

You must also have a borrowing proposal which the lender:

  • would consider viable, if not for the coronavirus pandemic
  • believes will enable you to trade out of any short-term to medium-term difficulty

Businesses with a turnover of less than £45 million may be entitled to other government support.

Exceptions

The following businesses are not eligible to apply:

  • credit institutions, insurers and reinsurers (but not insurance brokers)
  • building societies
  • public-sector bodies
  • further-education establishments, if they are grant-funded
  • state-funded primary and secondary schools

Further detail on eligibility will be confirmed later this month.

How to apply

The Scheme will launch on Monday 20 April. The Scheme will be available through a series of accredited lenders, which will be listed on the British Business Bank website.

Once the Scheme has launched, there is likely to be a big demand for facilities. You should consider applying via the lender’s website in the first instance. Telephone lines are likely to be busy, and branches may have limited capacity to handle enquiries due to coronavirus.

Kirk Rice commentary:

The announcement of the new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will be welcomed by the so-called ‘squeezed middle’ businesses not covered by the existing CBILS scheme and original measures. This Scheme will provide a government guarantee of 80% to banks making loans of up to £50m to businesses with an annual turnover of between £45m and £500m.

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) provides financial support to mid-sized and larger UK businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak. Specifically, it facilitates access to finance for businesses with a turnover above £45 million, the upper limit for the existing smaller-business focused Coronavirus Business Interruption Loan Scheme (CBILS).

CLBILS loans are available through the same range of British Business Bank accredited lenders and partners as for CBILS, which will be listed on the British Business Bank website.

A lender can provide:

  • up to £25 million to businesses with turnover from £45 million up to £250 million
  • up to £50 million to businesses for those with a turnover of over £250 million

And these amounts will be repayable over a term from 3 to 36 months.

Initial guidance suggests that the amount borrowed should not be greater than (i) double the borrower’s annual wage bill for the most recent year available, or (ii) 25% of the borrower’s total turnover for the most recent year available, or (iii) 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.

CLBILS gives the lender a government-backed partial guarantee (80%) against the outstanding balance of the facility.

The borrower remains fully liable for the debt.

Under the Scheme, personal guarantees of any form will not be taken for facilities below £250,000.

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.

As with the CBILS loans, this remains, to all intents and purposes, a standard business loan. The lenders will still wish to see the normal evidence to allow them to make a commercial lending decision and will need to establish that your business remains viable. Remember, this is a loan requiring full repayment, not a hand-out, and unstructured requests are unlikely to be fruitful.  Please speak to us for assistance with obtaining the loans.

We’ll be updating this page for the answers as and when they become available, so please, do check back regularly for further information.

 

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