What is the Coronavirus Business Interruption Loan Scheme?

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The Government has set up the Coronavirus Business Interruption Loan Scheme (CBILS), where they're guaranteeing £330bn of loans to UK businesses facing difficulties because of the pandemic.

Who runs the Coronavirus Business Interruption Loan Scheme?

It's operated by the British Business Bank; the loan money itself comes from one of their 40 accredited lenders, with the Government providing a guarantee against the amounts borrowed of up to 80%.

What is the Coronavirus Business Interruption Loan Scheme?

CBILS is a new scheme, announced by The Chancellor at Budget 2020, that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

Does the scheme only offer loans, or any other sorts of business finance?

CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance - not all finance types will be offered by all lenders, though, so you'll need to look at which ones you're going to apply to. Find out more at the British Business Bank.

What is the interest rate on the Coronavirus Business Interruption Loan Scheme?

That is determined by the lenders themselves, and has not been set or subsidised by the Government. Lenders will be lending on their normal commercial terms.

The Government has said that you won't have to make any interest payments on the loan for the first 12 months. Those payments are funded by the Government, via a 'Business Interruption Payment' along with any upfront lender costs. It's expected that you'll still need to repay your loan capital at that time.

How much can I borrow?

The scheme supports lending of up to £5million, with repayment terms of up to six years. Different lenders will have different criteria for this, though. It can be applied to any loans under £250,000, whereas for loans above this value you'll have to demonstrate that you have no security available.

What is a guarantee and why is it important?

Commercial lending is often secured, which means businesses borrow money using valueable items like commercial property as security. If you can't make your repayments, those items can be repossessed to repay your business' debt. Unsecured lending happens less often, as it's much more risky, and often at very high rates.

The guarantee offered through this scheme means that if you don't have any security to offer yourself, the Government will - at no cost to you - guarantee your lender that they will repay 80% of your loan value, in the event that you are unable to. This means lenders can relax their rules on who they lend to, and possibly their rates too, depending on indivdual circumstances.

Am I eligible?

Taken from the British Business Bank's guidance:

Smaller businesses from all sectors can apply for the facility (Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment). To be eligible for a facility under CBILS, an SME must:

  • Be UK-based in its business activity, with annual turnover of no more than £45m

  • Have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty.

How do I access the scheme?

You'll need to find an accredited lender who offers the product and terms you need. Transmit have suspended applications temporarily due to reaching capacity. Find other lenders at the British Business Bank's full list of lenders.

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