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Coronavirus Large Business Interruption Loan Scheme (CLBILS)
19th May 2020
UPDATED TO COVER CHANGES TO THE SCHEME EXPECTED TO GO LIVE ON 26 MAY
The Coronavirus Large Business Interruption Loan Scheme (‘CLBILS’) facilitates access to finance for medium-sized and larger businesses affected by the coronavirus outbreak.
This scheme provides crucial support for those businesses previously caught in between CBILS for small businesses and Covid Corporate Finance Facility (CCFF) for much larger investment grade businesses.
As with CBILS, this scheme is delivered by commercial lenders, backed by the British Business Bank. It was launched on 20 April.
Further changes from 26 May announced
On 19 May HM Treasury announced further changes to the scheme, including that larger businesses will benefit from loans up to the lower of 25% of turnover, or £200m. The current maximum loan size is £50m.
Companies borrowing more than £50 million through the scheme will be subject to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan, including a ban on dividend payments and cash bonuses, except where they were previously agreed. (These restrictions will also apply to those that wish to draw from the CCFF for a term beyond 19 May 2021.)
These changes are expected to go live on 26 May, with further details available on that date.
Current rules to 25 May:
Currently, a lender can provide:
• up to £25 million to businesses with turnover from £45 million up to £250 million
• up to £50 million to businesses with a turnover of over £250 million
Finance is available in the form of:
• term loans
• revolving credit facilities (including overdrafts)
• invoice finance
• asset finance
Finance terms range from 3 months to 3 years. For facilities above £250,000, personal guarantees may still be required, but claims cannot exceed 20% of losses after all other recoveries have been applied.
Businesses will need to prepare a considered funding application. Having an overview business plan including the impact of COVID-19 and the mitigating actions being taken, recent management accounts and cash flow forecasts will all be necessary to secure appropriate funding for your business during the pandemic.
Find out more about the scheme from the British Business Bank
Differences between the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme:
| Coronavirus Business Interruption Loan Scheme | Coronavirus Large Business Interruption Loan Scheme |
|---|---|
| Available to UK-based businesses with annual turnover of up to £45m per year | Available to UK-based businesses with annual turnover over £45m per year who have not taken up the Bank of England’s CCFF scheme |
| Provides the lender with a government-backed, partial guarantee (80%) against the outstanding guarantee facility balance, subject to an overall portfolio cap | Provides the lender with a government-backed, partial guarantee (80%) against the outstanding guarantee facility balance (including interest and fees), subject to an overall portfolio cap |
| A fee charged to lenders for each facility which makes use of the scheme | A fee charged to lenders for each facility which makes use of the scheme |
| Government has confirmed that the scheme will be demand-led and will be resourced accordingly | Government has confirmed that the scheme will be demand-led and will be resourced accordingly |
| The maximum value of a facility provided under the scheme is £5m (the original announcement suggested a maximum value of £1.2m) | The maximum value of a facility provided under the scheme is £50m for businesses with a turnover in excess of £250m, and £25m for businesses with turnover between £45m and £250m |
| Repayment terms limited to a maximum of six years for term loan and asset finance facilities up to £5m. For overdrafts and invoice finance facilities, terms will be up to three years | Repayment terms limited to a maximum of three years |
| The Government will make a Business Interruption Payment to cover the interest and any lender-levied fees in the first 12 months of any CBILS facility, so smaller businesses will benefit from no upfront costs and lower initial repayments (originally announced as 6 months). | Business Interruption payments will not be made for CLBILs. However, the 80%guarantee will cover interest and fees as well as principle. |
| For borrowing proposals 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. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so | For borrowing proposals 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. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so |
Capitalise
Bishop Fleming has a team of fundraising specialists ready to advise clients through Coronavirus. In addition, as a partner of Capitalise, we have access to 100+ lenders to provide businesses with the opportunity to secure the right kind of funding. Our Capitalise team will support you through all stages of the funding process.
Find out more about raising finance through Capitalise here.
