The scope of the Coronavirus Large Business Interruption Loan Scheme (CLBILS) was expanded by the Chancellor ahead of the scheme launch on 20 April 2020. The scheme enables banks to make loans to firms with an annual turnover of over £45 million. Businesses with a turnover exceeding £500m were not originally eligible to use the scheme. This will allow more firms to be able to benefit from this government support.
Qualifying businesses can apply for up to £25 million if their turnover is between £45 million up to £250 million and for up to £50 million if turnover exceeds £250 million. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest from three months to three years.
Under the scheme, the government will provide commercial lenders with an 80% partial guarantee on individual loans for businesses that would be otherwise unable to access the finance they need at this critical time.
Personal guarantees of any form will not be taken for facilities below £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.
Lenders will still be expected to conduct their usual credit risk checks, but this scheme allows them to specifically support business that were viable before the COVID-19 outbreak but are facing significant cash flow difficulties that would otherwise make their business not viable in the short term.
The new scheme supports a range of finance products including short term loans, overdrafts, invoice finance and asset finance.
