British Business Bank Approves New CBILS Lenders Including Fintechs

The British Business Bank has announced new lenders participating in the Coronavirus Business Interruption Loan Scheme (CBILS) including several digital banks.

Established in 2014, the British Business Bank is the UK government’s economic development bank. The Bank’s mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper and boost UK economic activity. September 2019).

According to a release, the co-operative Bank, Cynergy Bank, OakNorth Bank, and Starling Bank will join over 40 existing accredited lenders. Arkle Finance, Close Brothers and Secure Trust Bank, recently accredited under the Enterprise Finance Guarantee, are now accredited under CBILS as well. Coutts has been accredited for CBILS as part of RBS Group’s existing accreditation.

CBILS provides financial support to SMEs across the UK due to the impact of the COVID-19 pandemic. CBILS has been expanded t0 allow more smaller businesses to access the funding. Smaller firms that previously did not meet the criteria to access the funds due to insufficient security is no longer an issue. A lender may provide access up to £5 million to impacted businesses. More information is available here.

The scheme is a part of a wider package of government support for UK businesses and employees dealing with the Coronavirus crisis.

Keith Morgan, CEO, British Business Bank, commented on the announcement:

“Our accredited lenders have seen an incredible demand for CBILS in the past few weeks, so we are helping to meet that demand and provide even more choice for smaller businesses by approving additional lenders for accreditation to the scheme. These new lenders will be able to deploy vital funding and get additional finance flowing to smaller businesses across the UK as quickly as possible.”

Each approved lender will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving CBILS applications from smaller businesses across the UK.

The British Business Bank states that over 80% of the UK’s smaller businesses have a finance relationship with the 40+ existing CBILS accredited lenders. The British Business Bank says it is accelerating the onboarding of new lenders to further extend the scheme’s reach and has significantly increased the size of its accreditation team to manage the volume of interest.

The Bank reported that it is reviewing applications from a wide range of lender types – from PRA-regulated banks, to platform lenders, debt funds, invoice finance lenders, asset finance lenders, and responsible finance lenders.

CBILS features

  • Up to £5m facility: The maximum value of a facility provided under the scheme is £5m, available on repayment terms of up to six years.
  • No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme.
  • Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees[1], so smaller businesses will benefit from no upfront costs and lower initial repayments.[2]
  • Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years.
  • 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80% gross) against the outstanding facility balance, subject to an overall cap per lender.
  • No personal guarantees for facilities under £250k: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
  • Personal guarantees for facilities above £250k: Personal guarantees may still be required, at a lender’s discretion, but recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.
  • Security: For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the business interruption payment[3].
  • The borrower always remains 100% liable for the debt.

New eligibility criteria

Smaller businesses from all sectors[4] can apply for the full amount of the facility. To be eligible for a facility under CBILS, a smaller business must:

  • Be UK based in its business activity, with turnover of no more than £45m per year.
  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender.
  • Self-certify that it has been adversely impacted by the Coronavirus (COVID-19).

CBILS is available through the British Business Bank’s 40+ accredited lenders and partners, which are listed on the British Business Bank website.

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