The Chancellor has this morning announced some changes to the Coronavirus Business Interruption Loan Scheme (CBILS) following widespread concern voiced by the business community:
- Help for small business – Banks will be prevented from asking company owners to personally guarantee loans when borrowing up to £250,000 under the CBILS.
- Help for big business – The revamped scheme will offer government-backed loans of up to £25m to firms with revenues of between £45m and £500m.
- The requirement for companies to have first tried to get a normal commercial loan elsewhere will be dropped.
Andy Pear comments:
The Government has acknowledged the widespread concern that some of the emergency measures to provide financial assistance to businesses are not working.
Too few firms felt able or willing to take on loans that carried an 80% Government guarantee for the lender, but where the directors were still required to provide personal guarantees – just remember this is in the context of a global pandemic that is damaging thousands of previously viable businesses.
It is becoming apparent that lenders have now been given strong guidance from the government that they should be looking to support businesses that would have been viable if not for the sudden onset of COVID-19. As expected, lenders will have to follow a credit process, which is likely to require them to form a view on the forecast business performance for 2021 and 2022, the performance of the business prior to the onset of the Coronavirus, as well as how the business is planning on dealing with the current disruption during the lock-down period.