Banking and finance industry organization UK Finance announced on Thursday that its latest data revealed more than £2.8 billion has been lent to SMEs so far through the Coronavirus Business Interruption Loan Scheme (CBILS). The organization reported that total lending under CBILS has doubled in the week of April 14th to the 21st, with an increase of £1.45 billion. More than 9,000 loans were provided in the same period, with the total number of approvals increasing by nearly 120% to over 16,600.
UK Finance further observed that lenders have received more than 36,000 completed applications so far and 16,624 of these applications have been approved to date, while others are still being processed and will be approved over the coming days. Speaking about the data, Stephen Jones, Chief Executive of UK Finance, said:
“Frontline staff have been working tirelessly to get money to those viable businesses that need it as quickly as possible, with over £2.8 billion of lending provided to 16,000 firms so far. This lending forms part of a broad package of support provided to SMEs including additional loans, capital repayment holidays, extended overdrafts and asset-based finance.”
As previously reported, CBILS provides financial support to SMEs across the UK due to the impact of the COVID-19 pandemic. The program has been expanded to allow 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 to up to £5 million to impacted businesses.
The British Business Bank recently announced new lenders participating in the CBILS, which included several digital banks. Keith Morgan, CEO, British Business Bank, stated at the time:
“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.”
CBILS Features include:
- Up to £5 million 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 £250,000: Personal guarantees of any form cannot be taken under the scheme for any facilities below £250k.
- Personal guarantees for facilities above £250,000: 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.