What will the CBILS provide?
The facilities will comprise overdraft, term loans, invoice finance facilities and asset finance facilities. The key features of these facilities are as follows:
The scheme guarantees facilities up to a maximum of £5 million. It's available on repayment terms up to six years for term loans and asset finance and for up to three years for overdrafts and invoice finance facilities. The scheme provides an accredited lender with a government-backed 80% guarantee against the outstanding facility balance. There is no fee levied on the SME to access the scheme. As further support to the successful applicant of the scheme, the government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. You (the SME) will, therefore, benefit from no upfront costs and lower initial repayments although fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment.
The scheme may be used for unsecured lending at the sole discretion of the lender for facilities of £250,000 and under. For facilities above £250,000, the scheme requires the lender to establish that the business is not able to provide security prior to businesses using CBILS. Primary residential property cannot be taken as security under the scheme, and as such, your lender should not require you to provide this if applying under the scheme. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they must do so.
Please note: You must be aware that you, the borrower, will always remain 100% liable for the debt. The CIBLS guarantee is to the lender, not you, the SME.