Chancellor launches large business interruption loan scheme

business friction

The Chancellor of the Exchequer has announced details of the Coronavirus Large Business Interruption Loan Scheme (CLBILS).

Delivered by lenders accredited by the British Business Bank, the new scheme provides finance to mid-sized and larger UK businesses with turnover above £45m (the upper limit for the existing smaller-business focused CBILS).

CLBILS can help provide facilities of up to £25m for businesses with turnover from £45m up to £250m, and facilities of up to £50m for those businesses with a turnover of more than £250m who are suffering disruption to their cashflow due to lost or deferred revenues during the Covid-19 outbreak.

The new CLBILS scheme will support term loans, revolving credit facilities (including overdrafts), invoice finance and asset finance facilities. It is designed to give lenders greater confidence to provide funding by providing a partial guarantee of 80% of the outstanding facility balance.

  • Up to £50m facilities: up to £50m for those with a turnover of over £250m, and of up to £25m for businesses with turnover from £45m up to £250m.
  • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance.
  • Finance terms: Finance terms are from three months to three years.
  • Economic benefits go to the borrower: Borrowers will benefit from a proportionate reduction in pricing in return for lenders receiving capital and risk benefits.
  • Personal guarantees: No personal guarantees are permitted for facilities under £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20% of losses after all other recoveries have been applied.
  • The borrower always remains 100% liable for the debt.

To be eligibility:

  • Applicants must be UK based in its business activity, with turnover of over £45m per year.
  • They should have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.
  • The scheme is open to businesses who have not received a facility under the Bank of England’s Covid Corporate Financing Facility (CCFF).

Lender and Borrower are still free to enter into loan agreements outside of CLBILS e.g. where there is no economic benefit to the borrower of taking out a CLBILS loan over normal commercial lending.

CLBILS will be available through a range of British Business Bank accredited lenders and partners, which will be listed on the British Business Bank website. Existing CBILS lenders can seek expedited accreditations to become Lenders under the CLBILS scheme. The Bank expects to accredit a number of existing CBILS lenders shortly and is publishing a request for proposals documents making the scheme available to new lenders.

Keith Morgan, Chief Executive, British Business Bank, said: “The new Coronavirus Large Business Interruption Loan Scheme focuses on a relatively narrow area of the market, but one that is vitally important to the UK economy. More finance for viable mid-sized and larger firms will help them protect jobs and be in a better position to resume normal business when the current pandemic subsides.”

Stephen Jones, CEO, UK Finance said: “Banks and finance providers are committed to helping British businesses through these difficult times. With over £1.1 billion already lent to small and medium-sized firms through the CBIL scheme the launch of the new scheme for larger business will help to expand this support during these challenging economic conditions.

“Frontline staff across the industry are working tirelessly to deliver money to viable businesses as quickly as possible and providers will be working throughout the weekend to get this scheme up and running for Monday.”