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Last updated 1 June 2020

The British Business Bank has released additional details of its proposed ‘CLBILS’ funding scheme, aimed at medium to large businesses impacted by COVID-19. These revisions will be welcomed by a number of businesses, including those generating greater than £500 million revenue or PE-backed businesses, who may previously have been unable to access government funding schemes. Borrowers will need to approach accredited lenders with a well-structured request to improve their prospects of a successful and timely outcome.

N.B. The Government has announced a series of other financial support packages to help businesses (e.g. CCFF, Job Retention Scheme, business rate relief, grants etc.). Visit our COVID-19 homepage or go to www.gov.uk for further details.
 

Who is it for?

Mid-sized and larger UK businesses:
  • With revenue >£45 million
  • That have seen their cashflow disrupted and are losing revenue as a result of the COVID-19 outbreak
  • Where the finance will enable the business to trade out of short to medium term difficulty
  • Have not received a facility under the CCFF scheme
  • The following sectors are not eligible:
    • Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), insurers and reinsurers (insurance brokers are eligible)
    • Building Societies
    • Public-sector bodies
    • Further-education establishments, if they are grant-funded
    • State-funded primary and secondary schools

What is it?

  • A dedicated funding scheme providing guarantees to lenders, in order to encourage lending to larger businesses impacted by COVID-19
  • Amount available:
    • Up to £200 million 
  • This may be capped as follows:
    • 25 percent of the borrower’s total turnover for most recent year available;
  • Restrictions for businesses accessing the CLBILS scheme:
    • Businesses with more than £50 million outstanding under the scheme, with over 12 months until repayment, must agree certain restrictions, including not paying dividends and exercising restraint on senior management pay
  • 80 percent guaranteed by the British Business Bank (‘BBB’)
  • Loan term between 3 months to 3 years
  • Finance is available in the form of:
    • Term loans
    • Revolving credit facilities (including overdrafts)
    • Invoice finance (capped at £50 million)
    • Asset finance (capped at £50 million)
    • Interest and fees to be negotiated and paid by borrower in full

Further details can be found at British Business Bank's website here.

How do you access it?

  • Access via accredited lenders, including most large UK banks (see the British Business Bank website for more details).
  • Businesses must self-certify that it has been adversely impacted by COVID-19.
  • Provide a borrowing proposal that is considered viable, were it not for the current pandemic and which the lender believes the provision of finance will enable to business to trade out of any short and medium term difficulty.

Key considerations

  • Decision making is fully delegated to accredited institutions
  • Lenders will retain 20 percent of credit risk and are therefore likely to evaluate loans in line with typical credit process parameters
  • Careful positioning of credit story required with accredited lenders to demonstrate viability requirements
  • Lender and Borrower are still free to (and may need to) enter into loan agreements outside of CLBILS

What practical steps should companies take to access the Scheme?

  • Companies should approach lenders to access incremental funding as lenders need to determine whether to lend in the ordinary course and/or through CLBILS
  • Information requirements will be substantially the same with a well-structured funding request central to the success / speed of outcome. This should demonstrate:
    • Financial viability of the business pre-COVID-19 (pre-1 March 2020)
    • Robust plan and actions to manage through COVID-19 interruptions / impacts
    • Deliverable path to restoring financial strength and repay loans post COVID-19 crisis
    • Backed by well-grounded cashflow projections and scenarios
  • Acting fast remains paramount to meet required funding timescales given the volume of requests being managed by lenders

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