Coronavirus Large Business Interruption Loan Scheme

BLOG17th Apr 2020

Please note this scheme will close to new applicants on 31 March 2021

The Coronavirus Large Business Interruption Loan Scheme (“CLBILS” and the “Scheme”) provides financial support of up to £50m to mid-sized and larger UK businesses across the UK that are losing revenue and seeing their cashflow disrupted, due to the COVID-19 outbreak. The Scheme will opened Monday 20 April 2020 and provides support to businesses that were too large to access the Coronavirus Business Interruption Loan Scheme (“CBILS”).

CLBILS Overview

CLBILS is being provided by the British Business Bank (“BBB”) through participating partners (see further details below).

  • The Scheme has been introduced as a temporary measure, with the aim of supporting the continued provision of finance to UK mid-cap and larger enterprises with turnover in excess of £45 million during the COVID-19 outbreak.
  • 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.
  • The Scheme provides the lender with a government-backed, partial guarantee of 80% against the outstanding facility balance (including accumulated interest and fees), subject to an overall portfolio cap.
  • Businesses will still be 100% responsible for paying the facility back, and also all interest payments and any lender levied fees – interest rates are set by the lender and driven by a risk and reward matrix.
  • Finance provided can include loans, asset finance facilities, revolving credit facilities (including overdrafts) and invoice finance facilities lasting up to a maximum term of three years.
  • If the lender can offer finance on normal commercial terms without the need to make use of the Scheme, they will do so.
  • Under the Scheme, lenders will not take personal guarantees of any form for facilities below £250k.
  • For facilities above £250k, personal guarantees may still be required at the lender’s discretion, but recoveries will be capped at a maximum of 20% of the outstanding balance of the CLBILS facilities.

Eligibility

  • Eligibility Checklist for Large Businesses:
    • Business must be UK-based in its business activity
    • Have a group annual turnover of more than £45m p.a.
    • Have a sound borrowing proposal 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.
    • Self-certify that it has been adversely impacted by the COVID-19 outbreak.
    • Have not received a facility under the Bank of England’s Covid-19 Corporate Financing Facility.
  • If one lender turns you down, you can still approach other lenders within the Scheme – each lender distributing the fund will assess proposals on a case by case basis, so will all have their own criteria for lending and assessment of risk. Our expectation is that most banks will be dealing with their existing customers first, so advise businesses to speak to their incumbent lender in the first instance.

How do Businesses Apply for CLBILS?

  • Any businesses interested in CLBILS should approach one of the accredited lenders with their borrowing proposal (see further details below).
  • We advise businesses approach their incumbent lender in the first instance, unless they are not a participating lender. Full details of the participating lenders is available on the BBB Website.
  • Ideally approach lenders via either your Relationship Manager or their website in the first instance, as phone lines are likely to be very busy, and branches will be limiting capacity / potentially closing.

What do Businesses Need to Provide to Lenders?

As with CBILS, businesses will need to prepare and submit a borrowing proposal to lenders, which as noted above demonstrates that it is a viable business were it not for the current pandemic. We have outlined the key requirements that a business should consider in its borrowing proposal in advance of applying to lenders:

Financial Information

  • Recent full annual financial statements (some lenders asking for up to 3 years financial statements).
  • Up to date management accounts covering from the last financial year end to the latest date possible.
  • 24 months financial projections – at AAB we are able to quickly prepare detailed financial projections for your business, running sensitivity analyses on various lockdown scenarios.
  • Cash flow forecast covering the next 24 months, detailing any key assumptions around disruption – where possible various scenarios should be provided to demonstrate the business can support the financing sought.
  • Last 6 months bank statements for the business.
  • Current aged creditor and debtor listings.
  • List of all Assets and Liabilities of the business.
  • Where applicable, evidence of compliance with recent applicable financial covenants and financial information covenants.

Business Performance and Mitigating Measures

  • Commentary around the recent and historic performance of the business. Also share any specific performance issues (turnover/profitability) prior to COVID-19 that could have had an impacted on your business.
  • What impact has the COVID-19 outbreak had on your business, and what are the financial implications?
  • What changes or measures is the business making in the short to medium term to mitigate the effects of COVID-19? What measures will the business take to help drive performance either back to pre-virus levels or beyond? How long do you believe it will take for the business to get back to pre-COVID-19 levels after the pandemic is resolved?
  • What other options have been explored? e.g furlough, rate relief, Time To Pay arrangements, VAT deferral, local authority or other grant or loan schemes.

Loan Requirements

  • Provide details on the amount of the borrowing request and the term, as well as how this amount has been derived.
  • Demonstrate how the funds will be used to address the cash shortfall caused by COVID-19, and how the business will be able to repay the loan.
  • Financial analysis showing that the business would have been able to service the debt sought had it not faced difficulties from the COVID-19 outbreak.
  • Details of all current and existing credit, hire purchase or loan arrangements (and details of any existing security / guarantees in relation to these).

Current Accredited Lenders

  • Bank of Scotland (Term Loan)
  • Barclays (Term Loan)
  • Clydesdale and Yorkshire Banks (Term Loan)
  • HSBC (Term Loan and Overdraft)
  • Lloyds Bank (Term Loan)
  • NatWest (Term Loan)
  • Santander (Term Loan and Overdraft)
  • RBS (Term Loan)

Should you require any assistance with assessing whether your business is eligible for the CLBILS, or preparing your borrowing proposal to apply for a loan, please do not hesitate to get in contact with us.

If you are unsure about what government support package is available to your business, we are here to help. 

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