How to apply for a Business Interruption Loan

The British Business Bank has updated its guidance on how to apply for the recently changed Coronavirus Business Interruption Loan Scheme (CBILS). A summary follows;

Who can you apply to?

Most of the UK High Street banks can provide a CBILS loan facility. As your present bankers already know you and your business, for most businesses, making an application to your existing bank would seem to be appropriate.

Apply online

Due to the present disruption – phone lines are extremely busy and it’s unlikely you will be able to visit a branch – make your application online.

What about personal guarantees?

Under the scheme, lenders will not take personal guarantees if your loan application is below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

 

  • Guarantees will not include your home – they will exclude any property that is considered to be the residence that qualifies for capital gains tax Principal Private Residence Relief, and
  • Recoveries under these guarantees are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.

Who can apply?

To apply, 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 adversely impacted by the coronavirus (COVID-19).

 

The third point in this list is critical.

What your bank will need from you

Apart from completing the online application, lenders will need:

  1. The amount you want to borrow.
  2. Why you need the loan, what the money is to be used for.
  3. The repayment period, what term are you requesting, and
  4. Can you afford the repayments?

Supporting documents that may be required

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:

  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • Details of assets

The above requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

Note: For many customers approaching their existing lenders for a smaller facility, the process may be automated and therefore may not require the same level of documentation.

We can help

If you are considering a loan we can help you gather together the forecasts and other documentation you will need. We can also help you decide on the level of support you will need and how long you will need to repay the loan.

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