Apr 3rd, 2020
3 mins
The government has set up a temporary Coronavirus Business Interruption Loan Scheme (CILBS) to support SMEs with an annual turnover less than £45million, giving them access to loans, overdrafts, invoice finance and asset finance of up to £5million and for up to 6 years. The loan comes with no set up fee and is 12 months interest free.
With more than 130,000 loan enquiries since the scheme was launched on Monday 23rd March, fewer than 1,000 have been approved. Therefore, on Thursday 2nd April, the government made changes to CBILS to allow more businesses to access financial support during the lockdown.
The government-backed loans for small businesses has previously only been made available to those firms who had been turned down by their bank for a commercial loan – which saw some businesses having to pay interest rates as high as 30%.
With the government now making changes to the scheme, it means applications will not be limited to those that have been refused a loan on commercial terms, meaning all viable businesses affected by COVID-19 will be eligible. However, the treasury have not put restrictions in place for the interest rates the banks can charge for loans.
The government have also listened to the concerns of some larger businesses that are affected by COVID 19 and therefore, they will now be offered government-backed loans of up to £25million for those with revenues between £45Million to £500million. The main difference is, that the loan for larger businesses will not be interest-free.
The expanded scheme will be operational with lenders from Monday 6 April 2020.
More information can be found here: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/
