Coronavirus Business Interruption Loan Scheme (CBILS) Update: Personal guarantees

On 23 March 2020, the Coronavirus Business Interruption Loan Scheme (CBILS) was launched to provide facilities of up to £5m for smaller businesses across the UK. The Government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

CBILS is available through 40+ accredited lenders and partners which are listed here.

As an incentive for banks to provide lending, each lender is given an 80% government-backed guarantee for the loan repayments; however, the borrower will remain fully liable for the debt.

Amid backlash from businesses who were hoping to utilise the CBILS, the UK’s four main banks (HSBC, Lloyds Banking Group, Barclays and The Royal Bank of Scotland Group) have relaxed requirements surrounding personal guarantees. For businesses securing funding via CBILS, a personal guarantee from a director will now no longer be required if the loan is under £250,000.

HSBC have confirmed via its website that security requirements will be reviewed on an individual basis for loans above the £250,000 threshold. Furthermore, many of these banks, such as Barclays, have now made further commitments to limit interest rates for successful applicants of the scheme.

Further information on CBILS can be found in our FAQS & Practical Steps for Business in Scotland Guide and at the British Business Bank’s website

This article was co-written by Calum Lavery.

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