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Coronavirus Business Interruption Loan Scheme for SMEs

The Chancellor has introduced the Coronavirus Business Interruption Loan Scheme which will see support given to SMEs that are experiencing disrupted cashflow and a loss of revenue. Two loans have been introduced:

  1. Coronavirus Business Interruption Loan Scheme (CBILS) for SMEs with a turnover of up to £45 million
  2. Coronavirus Large Business Interruption Scheme (CLBIS) for businesses with a turnover in excess of £45 million.

SMEs and the Coronavirus Business Interruption Loan Scheme (CBILS).

  • The CBILS will support businesses in accessing bank lending which can include overdrafts.
    • All viable small businesses affected by COVID-19 will be eligible to apply for the scheme.

NB Prior to April 3rd, this was restricted to those who could not raise commercial funding through normal routes.

  • Loans of up to £5 million in value are available.
  • Government will cover interest payments for the first 12 months
  • Each loan will be provided with a government guarantee of 80%, for which businesses and banks will not be charged.
  • Banks have been banned from taking personal guarantees on loans of less than £250,000.
  • For loans in excess of £250,000, personal assets of business owners may be requested as security but only required to cover 20% of the loan amount (the part which is not covered by the government guarantee).

Some banks are indicating an intention to authorise Relationship Directors to approve loans in some business categories and to set levels of loan. This is encouraging because it will hopefully free up capacity, as credit committees have been swamped, and enable more loans to be granted.

Unfortunately, not all banks are taking the same approach to the loan. However, you can now approach any bank, not just the one you currently bank with, so it is worth speaking with advisors to ascertain which bank may be best for you.

However, the interest rate that some banks are offering such loans under are prohibitive. It is hoped that the government may intervene and seek to cap interest rates if banks seek to take advantage of the situation.

There are online resources available to assist you with preparing cash flow forecasts and modelling to enable the bank to make a quicker decision. One such resource is this article by Gloucestershire based accountants Hazlewoods.

Businesses and the Coronavirus Large Business Interruption Loan Scheme (CLBILS)

  • The CLBILS will, from towards the end of April, provide a government guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million.
  • The CLBILS will be subject to commercial rates of interest (unlike the CBILS there is no 12 months interest free period).
  • More details are expected in due course from the Government


These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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