Government Business Loan support (CBILS)

3 April 2020: Rishi Sunak has announced new support measures for businesses hit by the coronavirus crisis by bolstering business interruption loans for small businesses and announcing a new scheme for larger companies.

The Chancellor has announced the extension of the current Coronavirus Business Interruption Loan Scheme (CBILS) to all viable small businesses affected by COVID-19, in a move aimed at combatting fears that small and medium-sized businesses may become insolvent accessing emergency funds. 

In a statement, the government said the move is intended to “maximise the support available” and means that all small businesses will now be eligible “should they need finance to keep operating during this difficult time” – not just those unable to secure regular commercial financing.

New rules will prevent lenders from requesting personal guarantees for loans under £250,000, and the government has also stated that it will make operational changes to speed up lending approvals and continue to cover the first twelve months of interest and fees.

New measure for larger businesses

A new Coronavirus Large Business Interruption Loan Scheme (CLBILS) was also announced to tackle the so-called ‘squeezed middle’ businesses not covered by the original measures. This provides a government guarantee of 80% to banks making loans of up to £25m to businesses with an annual turnover of between £45m and £500m.

A government statement said the move will offer banks “the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS”. Loans backed by the guarantee will be offered at commercial rates of interest, but the government will not cover interest or fees in the same way as the small business scheme. Further details of the CLBILS scheme will be announced later this month.

According to the statement, the Chancellor will be speaking to bank Chief Executives next week to discuss how the schemes are operating, and to “ensure everybody is playing their part”.

Changes helpful, government now needs to finish the job

Commenting on the announcement ICAEW Chief Executive Michael Izza said: “We’re pleased the Chancellor has taken action to get cash flowing again, responding to feedback that businesses right across the economy were still struggling to access financial support.

“Extending loans to cover more small businesses and establishing a new scheme for larger companies are definitely steps in the right direction,” continued Izza. “The combination of procedural changes to accelerate loan approvals and the prospect of greater cooperation by the banks, as both the Chancellor and the Business Secretary have called for, should go some way to sustain confidence and protect employment and prosperity.

“However, the job is not yet complete: we hope that ministers will continue to listen to business, and be ready to introduce further targeted measures if they are necessary, as they surely will be.”

More than 130,000 loan enquiries

In the first official figures released since the original CBILS scheme was launched last week, the government also confirmed that more than £90m of loans to nearly 1,000 small and medium-sized firms have been approved.

The scheme has fielded more than 130,000 enquiries from businesses, with a current total of 983 applications for finance approved, according to latest figures from UK Finance.

“Banks are processing thousands of loan applications – and scheme changes made today will help them approve loans for the smallest businesses as quickly as possible,” a government statement said.

  • For the latest news and guidance on the ongoing impact of COVID-19 for businesses and accountants, visit ICAEW’s dedicated coronavirus hub.

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