Today the British Business Bank has announced that it has approved four new lenders for accreditation under the Coronavirus Business Interruption Loan Scheme (CBILS) – The Co-operative Bank, Cynergy Bank, OakNorth Bank and Starling Bank.
Following their approval, each lender will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving CBILS applications from smaller businesses across the UK.
More than 80% of the UK’s smaller businesses have a finance relationship with the 40+ existing CBILS accredited lenders. The British Business Bank is accelerating the onboarding of new lenders to further extend the scheme’s reach and has significantly increased the size of its accreditation team to manage the volume of interest.
The Bank is reviewing applications from a wide range of lender types – from PRA-regulated banks, to platform lenders, debt funds, invoice finance lenders, asset finance lenders and responsible finance lenders.
Keith Morgan, CEO, British Business Bank, said: “Our accredited lenders have seen an incredible demand for CBILS in the past few weeks, so we are helping to meet that demand and provide even more choice for smaller businesses by approving additional lenders for accreditation to the scheme. These new lenders will be able to deploy vital funding and get additional finance flowing to smaller businesses across the UK as quickly as possible.”
Shortly before the launch of CBILS, three lenders – Arkle Finance, Close Brothers and Secure Trust Bank – were accredited under the Enterprise Finance Guarantee (EFG) scheme and have also been accredited under CBILS and are ready to take applications from smaller businesses. Coutts has been accredited for CBILS as part of RBS Group’s existing accreditation.
Helen Bierton, Starling Bank’s Chief Banking Officer, said: “Business owners who have poured their heart and soul, not to mention their life savings, into successful enterprises are crying out for help. The important thing now is to get money into their hands. We believe that CBILS is the best way to do this. We’re delighted to be working with the British Business Bank as a CBILS lender.”
Starling will shortly confirm the date from which it will be ready to start receiving CBILS applications. Under CBILS, the first 12 months of interest on the facility and any arrangement fees will be paid by the UK government as a Business Interruption Payment. This means smaller businesses will benefit from no upfront costs and lower initial repayments. No personal guarantees will be required, so borrowers and guarantors will not have to put up their principal private residence as security.
About the scheme
The Coronavirus Business Interruption Loan Scheme, delivered through 40+ British Business Bank accredited lenders, is designed to support the continued provision of finance to UK smaller businesses (SMEs) during the Covid-19 outbreak. The scheme enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.
The scheme supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.
Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years.
No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and
any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.
Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80% gross) against the outstanding facility balance, subject to an
overall cap per lender.
No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment.
The borrower always remains 100% liable for the debt.
New eligibility criteria
Smaller businesses from all sectors can apply for the full amount of the facility. To be eligible for a facility under CBILS, a smaller business must:
· Be UK based in its business activity, with turnover of no more than £45m per year.
· Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.
· Self-certify that it has been adversely impacted by the Coronavirus (COVID-19).
How to apply
CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.
In the first instance, businesses should approach their own provider, ideally via the lender’s website. They may also consider approaching other lenders if they are unable to access the finance they need. Not every accredited lender can provide every type of finance available under CBILS.
 Following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. HM Government greatly appreciates this approach by lenders.
 Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.
 Please note that where there is security available, it is likely that the lender will take such security in support of a CBILS facility
 The following are not eligible under CBILS: Banks, Insurers and Reinsurers (but not insurance brokers); public sector bodies, further educational establishments if they are grant funded and state funded primary and secondary schools.