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24th March 2020

Coronavirus Business Interruption Loan Scheme (CIBLS)

I have been looking into the details behind these loans where the Government is offering to guarantee 80% of the loan.

It seems the CBILS is based on the existing Enterprise Finance Guarantee (EFG) with enhanced features.

It is important to note that the guarantee being provided by the Government is for the lender and therefore reduces the risk for bank making the loan. Therefore it doesn't reduce the borrowers liability for the debt. The liability of the borrower is no different than a conventional loan with out a Government guarantee.

My understanding is that banks looking to lend to a limited company for example would still seek to obtain a Directors guarantee for 100% of the loan. This will obviously depend on each business's circumstances and the policy of the lender.

I appreciate that this is a constantly moving situation but this is my understanding this far.

There is a lot more information on the British Business Bank website so please use the following link:

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

Very best
Nick Hunt