We wouldn’t blame you at all for feeling a bit brain boggled about the Government backed coronavirus loans that have been made available to businesses as we progress through lockdown, not least because of the heavy amount of acronyms involved. BBLS and CBILS for SMEs is a plate full of jargon nobody needs – right!?
We want to make sure it’s clear how much you can borrow to support your business at the moment, where the money is coming from, and how you’re required to repay it. Taking out a loan can feel a little intimidating at the best of times, so here’s the facts to help you make an informed decision during these challenging times.
The acronyms explained – what are BBLS and CBILS
BBLS (Bounce Back Loan Scheme) and CBILS (Coronavirus Business Interruption Loan Scheme) were introduced by the UK Government to help UK small and medium sized businesses who are struggling due to the pandemic.
As we continue with a national lockdown, the deadline to apply for one of these loans has been extended to March 31 2021.
What about the Recovery Loan Scheme?
At the Budget on 3 March 2021, the Government announced the Recovery Loan Scheme. This is another Government backed coronavirus loan scheme to help businesses affected by COVID-19. The Recovery Loan Scheme will launch on 6 April 2021. The information provided so far isn’t massively detailed, we will share more on this at a later date.
The who – who can apply?
To apply for a BBLS, The British Business Bank states your business must be able to self‑declare to the lender that it:
- Has been impacted by Covid-19
- Was established by 1 March 2020 and is engaged in trading or commercial activity in the UK
- Was not a business in difficulty at 31 December 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules)
- Is not already making use of the CBILS, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility.
- Is not in bankruptcy or liquidation at the time of application
- Derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges)
To apply for a CBILS, The British Business Bank states your business must:
- Be UK-based in its business activity
- Have an annual turnover of no more than £45 million
- Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
- Self-certify that it has been impacted by COVID-19
- Not have been classed as a business in difficulty, if it is applying to borrow £30,000 or more
The what – what can you apply for?
One of the key differenced between the two loans is the amount you can borrow.
- With a BBLS you can apply for a loan ranging from £2,000 or 25% of turnover, to a maximum of £50,000. The interest rate is 2.5% a year, so will be one of the cheapest loans you can get.
- With a CBILS you can apply for a loan of up to £5 million. The interest rate varies depending on the lender.
The where – where does the money come from?
The money you apply for is loaned from lenders who are participating in the scheme. Often your best bet is to contact your own bank, but if they can’t help then check to see who else you could try. The coronavirus loans are Government backed – the Government guarantees 100% of BBLS finance and 80% of CBILS finance to the lender.
You can apply directly to one of the participating lenders listed here:
Eligibility criteria can also be found following at these links.
The how and when – how are you required to repay the loan and how fast?
If you already have a BBLS but didn’t take the full amount you were entitled to, you can request to borrow more (to the maximum allowed) before the 31 March 2021 deadline.
No repayments are due from the borrower during the first 12 months. The Government pays the fees and interest charges of the loans during this period.
The length of the BBLS loan has recently been extended to up to 10 years as part of the Chancellor’s ‘Pay As You Grow’ repayment flexibility, announced on 8 February 2021. The first repayment is due in month 19. Your lender will contact you before your first repayment is due to discuss further options:
- Extending the term to 10 years
- Moving to interest only repayments for 6 months, an option you can use up to 3 times
- Once you have made 1 repayment you can choose to pause your repayments for 6 months.
The length of the CBILS loan depends on the type of finance you apply for.
- Up to 3 years for overdrafts and invoice finance facilities
- Up to 6 years for loans and asset finance.
If your brain is still boggled, we can help
If you believe you might be eligible for one of these loans, and it could really help your business out of a difficult place, do reach out. We can help with the unboggling and talk through your situation.
We’ve seen and helped plenty of businesses make use of the loans and grants made available during lockdown. This situation has been hard for many, and Government backed coronavirus loans have been a lifeline for many. Help is here if you need it.