Coronavirus Large Business Interruption Loan Scheme – how it works

The Coronavirus Large Business Interruption Loan Scheme goes live on Monday, April 20 enabling larger businesses affected by Covid-19 to borrow up to £50m through state-backed loans

From Monday, April 20, businesses with a turnover of more than £250m will be able to borrow £50m from banks under the Treasury’s new Coronavirus Large Business Interruption Loan Scheme (CLBILS).

The move extends the existing Coronavirus Business Interruption Loan Scheme (CBILS) from its remit of helping small businesses with turnover of up to £45m, which was later changed to allow larger firms to borrow up to £25m. Lifting total borrowing to £50m was necessary, experts thought, to be able to make a difference to larger companies.

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 which 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.

Finance terms are from three months to three years.

No personal guarantees are permitted for facilities under £250,000. For facilities of £250,000 and over, claims on personal guarantees cannot exceed 20 per cent of losses after all other recoveries have been applied.

Rishi Sunak, the chancellor, said: “I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy.”

Larger companies had fallen between the gaps of the loan scheme for firms with turnover up to £45m and a separate scheme for very large companies with investment-grade debt that can sell commercial paper to the Bank of England.

The government will guarantee 80 per cent of the larger loans, as it does at present for smaller ones. Banks will not be able to ask for personal guarantees on loans under £250,000.

All of the larger loans will be available from Monday from banks that are accredited by the British Business Bank, the state-owned entity.

About 10,000 companies are expected to fall within this group, according to the Financial Times.

Banks “will be working throughout the weekend to get this scheme up and running for Monday”, said Stephen Jones, head of bank trade body UK Finance.

Coronavirus Large Business Interruption Loan Scheme eligibility criteria

Businesses from all sectors can apply for a facility.

  • 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)

How to apply for CLBILS

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. The BBB 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.”