When Rishi Sunak got up in the House of Commons we were all waiting for an announcement modifying CBILS. Maybe bringing in a 100% guarantee for small loans under £25,000.
What we got instead was yet another new and dare we say it unprecedented measure. A new loan scheme for small businesses to tap into. As we have learnt from other measures introduced over the last few months the detail will follow but this is what we know so far.
- Businesses trading as sole traders, partnerships or Limited Companies will be eligible.
- Businesses from any sectors will be eligible except for; banking, insurers and re-insurers, public sector bodies, Further Education institutions if grant funded and state funded primary and secondary schools.
- Businesses must be based in the UK.
- Business must have been negatively affected by the coronavirus crisis.
- Was not an “undertaking of difficulty” on 31 December 2019. This means the scheme may only be open to businesses of a certain age and/or who do not have accumulated losses > 50% of share capital.
- Loans will be between £2,000 and £50,000 with a cap of 25% of last accounts turnover.
- No Personal Guarantee required.
- No interest for the first twelve months.
- We don’t expect there to be a fee or early repayment penalties.
- Loans can be repaid up to six years.
We expect these loans to be available through a number of lenders including high street banks from Monday 4 May.
You won’t be able to have both a CBILS and bounceback loan but you may be able to move a CBILS loan to a Bounceback loan up to 4 November 2020.
More to follow when further details are announced.
NB The broad definition of an ‘undertaking in difficulty’ is here:
“This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital.”