UK Coronavirus Large Business Interruption Loan Scheme (CLBILS) scheme details released

Details of the UK’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) scheme were released late last night. It opens on Monday:

Amount of credit:

• turnover GBP45 million - GBP250 million: up to GBP25 million
• turnover >GBP250 million: up to GBP50 million
• no longer a maximum turnover (originally GBP500 million had been suggested).

The limits apply to group turnover, as for CBILS.

The amount of credit should not exceed (i) double the borrower’s annual wage bill for the most recent year available, or (ii) 25% of total turnover for the most recent year available, unless “with appropriate justification and based on self-certification” more is needed to cover liquidity needs for the next 12 months

Eligible borrowers

The Government press release says the scheme is aimed at firms which “do not qualify” for the existing CBILS nor the CCFF, but this is misleading.  The further details on the British Business Bank page just say that the borrower must not have already tapped the CCFF scheme, so investment-grade (or equivalent) firms with turnover over GBP45 million have a choice.

A borrower must be “UK-based in its business activity” and “have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty”.

It must self-certify that it has been adversely impacted by COVID-19, and not have received a CCFF CP facility.

Credit institutions, insurers and reinsurers, and various public sector and education bodies are ineligible.

Finance terms:

• Finance (term loans, revolving credit facilities, including overdrafts, invoice finance and asset finance) is 80% guaranteed by the government, so participating banks (those on the British Business Bank website) still have some risk and so will still need to do credit checks, likely to slow the take-up but necessary as a guard against fraud and moral hazard.
• Personal guarantees “will not” be taken for finance up to GBP250,000; above that, they may but not to exceed 20% of any ultimate net loss.
• Finance is available to borrowers for up to 3 years tenor (rather than the 6 year limit for the smaller CBILS scheme).
• Unlike the smaller CBILS scheme, the Government will not make any “business interruption payments” to cover interest and lender fees in the first 12 months of the facility.

More details are on the Britsh Business Bank’s FAQs page.