What is the Corporate Business Interruption Loan (CBIL)?

As an accountant, I have been seeing so many businesses ask the question "what is the Corporate Business Interruption Loan, and should I use it?" I wanted to share with you my advice and feedback on the loan, and how your company can maximise the opportunity for your business.

What does the Corporate Business Interruption Loan offer?

Let's start with the details - the government has worked with banks to offer business loans to companies of up to £5m with 12 months interest free, without the need to require a personal guarantee nor to your main residence. The government have stated that they will cover the first 12 months of interest payments and any lender-levied fees so you, as the business owner, can benefit from no upfront costs and lower initial repayments. There are 40 accredited lenders who are able to offer this scheme, which includes all major banks.The government have confirmed they will provide lenders with a guarantee of 80% of each loan (this is, however, subject to pre-lender caps on claims) so lenders can have further confidence in providing finance to small and medium businesses.

Is my business eligible for the Corporate Business Interruption Loan?

Your business is eligible for the loan if you are based in the UK, with an annual turnover of up to £45m, and has a borrowing proposal which the lender can consider "viable" if not for the coronavirus pandemic. This is where you need to put the legwork in.When you apply for the CBIL with your bank, and I advise you go with the bank you are currently losing so you are not put right to the bottom of the very long queue of a new bank's list, you will need a few things ready:

• The bank will require a minimum 2 years of financial statements
• Management accounts from the last year filed up until the present moment will be requested from the bank
• A business plan with projections depending on the lender. These have been shown with a variety of requirements from 3 to 6 months.

CBIL requirements - the business plan

The business plan that banks are requesting for the CBIL are different to any other plan you may have made in the past, so I highly recommend you speak with a professional to make sure your request for the loan has the best chance of being accepted. In short, the business plan you need to show to the bank is one that is focused on survival. It needs to includes things such as what cuts you will be making, the overheads you will be reducing, the number of employees you will be making furloughed, and how you will be expecting to maintain clients during these times.

My advice for being accepted for the Corporate Business Interruption Loan

I have seen some sad cases where banks are using this opportunity to potentially work around the regulations and enable themselves to potentially get more income and interest from the business owners who are facing such tough times, so I want to ensure you have the best experience and preparation before you get in touch with your bank. Here are my 5 tips to making sure your request for a CBIL is accepted:

1. 1. Do it! The first thing I must state is to go and request the loan. As there are 12 months interest free, without the requirement for personal guarantee or to use your main residence as a guarantee, I recommend you apply and put it in your savings account even if you do not need to use it right now. It will give you the comfort you may need in the future and it will put you in a different state of mind from desperation to success.
2. 2. You should to apply through the bank you are currently banking with as a business. This is different to how we would usually advise in more certain conditions, however, during these times it is best with your own bank. There are many banks who have a criteria that they will only offer the loan to current clients.Another point to consider is that the number of requests are sky high at the moment, so asking a bank you do not bank with will mean you go to the bottom of the queue. Although there is no end date to the CBIL scheme, we recommend you apply sooner rather than later to beat the influx of other business owners who are doing the same thing.
3. 3. Do your homework. Check what your bank will be requesting in advance of calling them, so you know exactly what you need, and who you may need to bring in to support you.
4. 4. Get a professional to help with your business plan. You should make sure you have the greatest opportunity for success, so use a professional to help you create the best business plan in relation to your bank's requirements.
5. 5. Read the paperwork during the application stage and negotiate with your bank. Know your rights – make sure to reach out to your accountant to ensure you know exactly what you, as a business, are legally permitted. There are also several links on the government website, and several other excellent pieces by the banks themselves which share their advice. Banks have been known to put different clauses and regulations within their loans, so read the fine print, and speak up if you feel they are going against the government's statements.The requirements they have added such as providing smaller amounts, requiring personal guarantees from directors, disqualifications without rightful reasoning to force corporate lending are but a few of the ways some banks have tried to get around the scheme. You must protect yourself and know your rights prior to having the application process. Please note – any funding up to £250,000 does not require personal guarantee, and no registration to your personal residence.

We recommend you apply now, without the data, so you are in the queue for the bank manager to contact you, giving you time to prepare the required information. It can take 1 – 2 weeks for the bank to get in touch, so reach out to your accountant and get them on board, so you have your application ready. Make sure that is bulletproof so you can get the funding.I hope you have found this useful, and do reach out to the government website for full details, or speak with your accountant who should be able to assist with the finer details. If you are planning to work hard on transforming your business during this lockdown, I'd love to invite you to read my book, which focuses on rewiring your mindset and your business for success in 6 steps. For now, stay safe and stay driven - as a business owner you can get through this time better and stronger.