Coronavirus Large Business Interruption Loan Scheme

30 April 2020

Author: Fearghal McVey
Practice Area: Banking & Finance, COVID-19

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Further to calls for a more tailored approach to certain coronavirus business relief schemes, the government together with the British Business Bank (BBB), have responded with (i) certain refinements to existing schemes and (ii) the recently announced Coronavirus Large Business Interruption Loan Scheme (CLBILS).

It is hoped that the new CLBILS, which will target mid-sized to larger businesses, together with the previously launched Coronavirus Business Interruption Loan Scheme (CBILS), will result in more effective support products for businesses being available, geared towards size and scale of the individual business, as appropriate. For further details on the CBILS loan scheme please see our previous updates.

We look at some of the key features of the CLBILS below. The CLBILS will be made available to UK businesses with an annual turnover of £45million.

Coronavirus Large Business Interruption Loan Scheme (CLBILS)

1. Aims: To assist large businesses suffering cash flow disruptions as a result of coronavirus.

2. Supported by: Again, like the CBILS, the new CLBILS will be administered by the BBB, although ultimate authority in connection with the decision whether or not to make the facility available under the CLBILS will rest with the accredited lender (see 3 below). .

3. Relevant Lenders: The scheme will again, like the CBILS, be made available through BBB’s accredited lenders.

4. Target Businesses: The CLBILS will be available to businesses with minimum annual turnovers of £45million upwards to a maximum cap of £250million.

5. Borrowing Proposal: Must be one which would be viable to the accredited lender were it not for business interruption issues caused as a result of coronavirus. The borrower must not have received any facilities pursuant to the Bank of England’s CCFF programme.

6. Facility Amounts:

  • Facilities of up to £25m may be available to businesses with a turnover from £45million up to £250million.
  • For businesses with a turnover of in excess of £250million, facilities of up to £50million may be available.
  • 7. Facility Terms: Facilities shall be made for periods of between 3 months and 3 years.

    8. Available Facility Products: these can include:

  • term loans;
  • revolving credit facilities;
  • invoice financing;
  • asset finance.
  • 9. Government Guarantee: Facilities made under the CLBILS will be subject to 80% government backed guarantee on the outstanding balance of a relevant CLBILS facility.

    10. Personal Guarantees: No Personal Guarantees (PGs) are permitted for facilities under £250,000. PGs may be required for facilities over £250,000, however claims on such PGs may not exceed 20% of losses after all recoveries have been applied.

    11. Borrower Liability: Borrowers will be liable for the debt in full.

    12. Excluded Sectors: Certain business sectors have been excluded from the new CLBILS including:

  • credit institutions, insurers and re-insurers (though not insurance brokers);
  • building societies;
  • public sector bodies;
  • further educational establishments (if grant funded);
  • state funded primary and secondary schools.
  • Future Fund for Innovative Businesses

    In addition it has been announced that a new Future Fund to support innovative businesses will be made available, with a bespoke approach being adopted for such businesses, in an attempt to overcome certain issues which they may experience in accessing existing support schemes.

    Innovative businesses at the early stages of development may not be able to satisfy revenue or profit thresholds required for either the CBILS or CLBILS schemes so in partnership with the BBB the government will launch, in May 2020, the Future Fund to provide government loans of between £125k and £5 million, subject to match funding requirements from private investors.

    The full eligibility criteria for the Future Fund is due to be published and those potentially within this sphere should monitor developments.

    Bounce Back Loan Scheme

    Finally, on 27 April 2020, the first details of the new small business targeted “Bounce Back Loan Scheme” (BBLS) emerged which will be subject to a new fast-track process for potential borrowers and will be backed by a 100% government guarantee.

    The new scheme is designed to provide fast and efficient access to cash by small businesses who were on a viable footing prior to the coronavirus.

    Under the BBLS eligible businesses will be able to borrower between £2,000 and £50,000. No repayment under loans issued pursuant to the BBLS will be required for the first 12 months and will involve short-form applications with the intention that funds can be made available within days.

    Note the BBLS is not yet available and will launch on 4 May 2020 with further details expected.

    If you have questions in connection with the CLBILS, please feel free to contact the Banking team.

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