Despite the current circumstances Thompson Smith and Puxon remain open for business via remote working and as such are available to assist with any questions you may have about recent government announcements relating to businesses, employees and landlord and tenant issues, or any queries of any nature relating to your business at this uncertain time.

The government advice is regularly updated and so we can keep you up to speed with the changing requirements and information.

Coronavirus Business Interruption Loan Scheme (CBILS)

What do we know so far about the CBILS?

The government has announced there is to be a loan scheme available for SMEs from 23 March, by which businesses can apply for emergency funding. The government advises that SMEs speak to their normal bank providers as a starting point. The CBILS is to provide for funding of up to £5m, either through term loans, overdraft facilities, asset financing or invoice financing, depending on the individual lender. The government has committed to guaranteeing 80% of the amount borrowed to the lender and to cover the first 12 months of interest payments and any related arrangement fees. Please note the business is 100% liable for the amounts borrowed, the guarantee is only between the government and the lender.  To be eligible, the SME must:

  • Be UK based;
  • Have a turnover of less than £45m;
  • Importantly, have a borrowing proposal which, save for the effects of the coronavirus crisis, would have been viable; and
  • Be from an eligible industry sector, which should be all sectors save for banks, building societies, education providers, religious or political organisations and trade unions.

The current advice is to contact your normal finance provider/business bank via their website and start the application process. The loans are made at the lenders’ discretion and any applications will be judged on their merits. The terms available 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.

Each lender can, by their individual discretion, offer the CBILS for unsecured lending for facilities of £250,000 and under. For facilities above this, the lender must establish a lack or absence of security prior to businesses using CBILS. If the lender can offer finance on normal commercial terms without the need to make use of the scheme, they will do so. A primary residential property cannot be used as security under these loans.

Whilst there is no limit to the amount of funds the government will inject, as they have said this scheme is demand-led, the SME must show that the business would normally have been viable and that a clear business plan is in place.

Please note use of this scheme does not prelude your business from taking advantage of the other government measures announced, such as the business rates relief and cash grants for certain hospitality businesses.

If we can assist with any questions you may have, please contact: Mary-Anne Fedeyko, Nick Mayles or Claire Powell, all directors in our Corporate Commercial team.

Any employment related queries should be directed to Jolyon Berry.

Any commercial property queries should be directed to Stephen Firmin or Kerry Addison.

Any insolvency related queries should be directed to Nicola Rout.

You can download a PDF version of this information here.

All information correct as at noon on 23 March 2020