CBILS small business guarantee could rise to 100% | moneyfacts.co.uk

Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 24/04/2020

The Treasury is reported to be considering increasing the Government backing for Coronavirus Business Interruption Loans (CBILS) from 80% to 100% for small loans up to £25,000 with a decision expected next week. The eligibility criteria for a small business is not yet known and if any changes will be back dated to previously declined applications. This potential change to CBILS could see as many as one million businesses become eligible for business loans with the 100% Government guarantee. Larger businesses are expected to remain on the current scheme with the 80% guarantee.


CBILS was announced five weeks ago to help businesses that have had their trading impacted by Covid-19. The scheme has encountered criticism for not achieving higher levels of lending and reports from businesses struggling to access the finance they need. Our analysis of the scheme has shown that the availability of lenders available does have constraints. Of the 32 lenders advertised on the British Business Bank website, six are not currently operating under the scheme, 12 only accept existing customers and 14 only offer loans to specific regions. 


It is hoped that this latest change to CBILS will increase the lending completed and attract more lenders on the scheme. The current version of CBILS does not allow personal guarantees on business loans below £250,000, something that is often used by lenders to help minimise the risks and costs of business loans defaulting. The increase of the guarantee to 100% may now help existing lenders on the scheme to agree lending decisions that may have been marginal and to bring new lenders onto the scheme.
Small businesses wanting to apply for a loan under CBILS may want to consider using a business loans broker. A broker will be able to help identify the lenders that will best suit your situation and help with the collation of information required for an application.

 

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