The Chancellor has recently announced the extension of CBILS to end January 2021. The scheme that offers business loans, invoice finance, asset finance and business overdrafts is open to businesses that need finance due to Covid-19 affecting their trade.
Up to 18 October over 73,000 businesses had received more than £17 billion from CBILS and a further £1.3 million had received £40bn from Bounce Back Loans. In addition, 632 larger firms also received £4.57 billion under the overall scheme.
Businesses can either qualify for a Bounce Back Loan or CBILS loan, with CBILS split between SMEs and larger firms. Bounce Back loans are for small businesses that may be struggling to access support under other Coronavirus support schemes, such as the Furlough scheme or Self Employed Support Scheme. This allows businesses to borrow from £2,000 up to 25% of your turnover to a maximum of £50,000 at a fixed interest rate of 2.5%.
The Chancellor has also announced some additions to the scheme called Pay as you Grow. This includes payment holidays and/or interest-only payments of up to six-months. Businesses will be allowed to use a payment holiday once during the loan and will have need to have made at least six payments for requesting one. In addition, those businesses that have already received a Bounce Back Loan can now also extend this up to the full £50,000 if they meet the lender’s criteria.
CBILS for SMEs offers business loans of £50,000 up to £5 million. Interest rates are set by the lender and are dependent on how they view the risk of the loan. To be eligible for a loan under CBILS businesses need to have a minimum turnover of £100,000 and a salary bill of £12,500 or more.
Both loan schemes provide 12-months interest free, with no payments to make and the loans can last up to ten years.
There is more information in our guide about eligibility and how to apply for CBILS or businesses can contact our preferred business broker for advice about their case.
