Government lending schemes launched today – here’s what you need to know

The Chancellor recently unveiled £330 billion of government backed and guaranteed loans on ‘attractive terms’ for any business that needs cash to pay rent or salaries etc. 

This funding is available in two main schemes, both of which are now active:

Coronavirus Business Interruption Loan Scheme (CBILS)

CBILS was launched today (Monday 23 March).  It is being delivered by the British Business Bank and is available from 40 accredited providers (see list here).  It will provide loans of up to £5 million.  The lending facilities can take the form of:

·       Term loans

·        Overdrafts

·        Asset finance

·        Invoice finance

The repayment terms vary from up to three years (for overdrafts and invoice finance facilities) to six years (for term loans and asset finance).  

The loans will now be interest free for the first 12 months and are aimed at small and medium sized businesses (defined as those with turnover of no more than £45 million per annum).  Full details and FAQs are available here

There are a number of eligibility criteria. The key thing to consider is that the facility is a guarantee and not a government loan i.e. the lending criteria of the bank still apply. 

The criteria are clear in that firms need to have a ‘borrowing proposal which, were it not for the COVID-19 pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable your business to trade out of any short-to-medium term difficulty’.

If you are looking for finance under CBILS, the government encourages you to approach your own provider in the first instance – ideally via their website. You may also want to take this opportunity to talk to us, as we can work with you to advise on your eligibility and the most appropriate facility for your business.

If businesses do not have a viable bank lending proposal, then other solutions may be available – please talk to us for more information.

Covid-19 Corporate Financing Facility (CCFF)

Under the CCFF, the Bank of England will buy short term debt from, primarily, larger companies that can demonstrate they ‘were in sound financial health’ prior to the current crisis.  Companies who wish to use the scheme do not need to have issued commercial paper before.

If you want to apply for the CCFF, you will need to contact your bank or finance provider in the first instance to check your business’ eligibility.  Once again, you may also want to take this opportunity to talk to us.

Further information is available from the Bank of England website; note that the site is being regularly updated throughout the day, so do keep checking back.

Based on the numerous conversations that we have had with clients over the last few days, we expect significant demand for new facilities.  It is also clear that, for some businesses, this lending and the other initiatives introduced over the past few days by the government, may be insufficient to bridge the working capital shortfall resulting from significantly reduced turnover.   Restructuring or additional working capital funding may still be required, and businesses will need to constantly review their operations and see where efficiencies can be made. 

Please get in touch if we can help in any way at all:

London office:

Stephen Goderski (  +44 (0)207 516 2224) 

Peter Hart (  +44 (0)207 516 2221)

Leeds office:

James Sleight (  +44 (0)113 426 7404)

Oliver Collinge (  +44 (0)113 426 7405)