As part of a package of measures designed to mitigate the economic impact of Covid-19, the UK Government has created the Coronavirus Business Interruption Loan Scheme ("CBILS").

The key features of CBILS are:

  1. The borrower must be UK-based in its business activity, with annual turnover of no more than £45m
  2. The maximum amount of a facility provided under CBILS will be £5m
  3. Term loans and asset finance facilities are available with terms of up to six years; for overdrafts and invoice finance facilities terms will be up to three years
  4. Most borrowers will benefit from no upfront costs and lower initial repayments, as interest and any fees charged by lenders will be paid by the Government for the first 12 months
  5. CBILS provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender
  6. The borrower always remains 100% liable for the debt

CBILS is being made available via the British Business Bank’s panel of over 40 accredited lenders, which includes both the usual high-street banks and also a number of alternative lenders.  Borrowers are advised to contact their own lender through its website in the first instance.

Demand for CBILS is likely to be very high.  It is therefore crucial for borrowers to get their applications in early, and have all supporting information readily to hand.  This includes detailed annual and management accounts; forward looking financial information such as budgets and cashflow forecasts; and evidence that the business has considered as fully as possible the impact on it of Covid-19 and is taking steps to alleviate that.  It is important to bear in mind that lenders will continue to apply credit and eligibility criteria, and a borrower’s business must have been viable before the impact of Covid-19, and expected to continue to be viable in the long term.

Some lenders have also announced their own schemes to support particular types of borrower and/or particular sectors, so it is also worth borrowers checking with their lender whether they would qualify for any of those.

Whilst accessing funds quickly will be key for borrowers, it is also important that they fully understand what they are signing up to, particularly in terms of repayment and interest requirements, obligations they will have to comply with during the life of the loan, and the potential consequences were things to go wrong.

If you require further information or advice on the terms of any loan or security documents your bank might require you to enter into with them to obtain this funding, then please feel free to contact our Head of Banking and Finance, Michael Kidd via the enquiry form or phone number provided.

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Lupton Fawcett are a leading personal and commercial law firm in Yorkshire with well-established offices of highly experienced solicitors in Leeds, Sheffield and York.

We have spent over one hundred years using our legal skills to help you through difficult, complicated, or emotional times.  Within every area of law, we put your interests first.

We provide a personalised service, with sector specialists and extensive resources to ensure we are giving you the best solutions to your problems.

Lupton Fawcett has long been recognised for our expertise in Banking & Financial Law.

Our Banking and Finance Solicitors act regularly for clients across the United Kingdom including Bradford, Birmingham, Hull, Liverpool, London, Manchester and Nottingham.

As recognised experts in Banking and Finance Law we can support your needs wherever you live in England, Wales & Northern Ireland.

Call today or complete the enquiry form and we will get back in touch with you quickly.  We will always respond promptly, and we will be happy to help.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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