What your business needs to know about the CBILS and BBLS repayments
Finance & Funding
Key learnings
- The Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) were launched by the government in response to the COVID-19 pandemic.
- The loans provided a lifetime for many businesses and offered favourable interest rates and terms and conditions – but they still need to be repaid.
- Businesses worried about repayment should contact their lender or one of the other organisations that can provide support.
- Both the CBILS and BBLS ended in March 2021 and were replaced by the Recovery Loan Scheme.
In response to COVID-19 pandemic the UK government launched two schemes to help businesses cope. The Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS) subsequently helped more than 1.5m businesses across the country. Both schemes came to an end on 31 March 2021, and so we look at what this means for businesses and what they can do if they're concerned about repayments.
Find out more below...
The Coronavirus Business Interruption Loan Scheme (CBILS) was introduced to provide financial support to smaller businesses across the UK that were suffering financially due to the pandemic.
Businesses could access financial support of up to £5m and the scheme was available through a selection of accredited lenders.
Financial support of up to £5m was available on repayment terms of up to six years for loans and asset finance and up to three years for overdraft and invoice finance.
1
Fees and interest
For SMEs who accessed CIBLS, there was no guarantee fees. Interest and lender-levied fees were met by the government for the first 12 months after facilities were secured.
Interest rates depended on the lender and the specifics of each lending proposal. For more information on what interest rates are repayable, contact your lender directly.
2
Personal guarantees
For loans of up to £250,000, lenders took no form of personal guarantee. For facilities above £250,000, personal guarantees were down to lender’s discretion. However, as stated by the British Business Bank:
- Recoveries under these were capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.
- A principal private residence (PPR) could not be taken as security to support a personal guarantee or as security for a CBILS-backed facility.
3
What happens if I can’t repay your CBILS?
Business owners who took out CBILS remain accountable for the debts they have taken on. However, if you are worried about or struggling with repayments, please contact your lender directly or see the resources below.
4
What if I want to liquidate or sell my business while I have a CBILS loan?
Borrowers are liable for any debt amassed under a CBILS loan, but if the company has gone into liquidation and the bank is unable to recoup the debt owed, they are able to claim against the government guarantee.
If a business is sold, assets (including the net borrowing) are usually either transferred to the new owner or repaid prior to the sale, depending on what both parties have agreed on.
If the business is owned by specific individuals (sole trader or partnership) they would be expected to repay the CBILS debt. Where it is a Limited Company, it is more likely for the debt to be transferred on sale.
The Bounce Back Loan Scheme (BBLS) was designed to enable the smallest businesses to access finance more quickly during the coronavirus outbreak.
It was targeted at businesses in the UK in need of small amounts of money, quickly.
The government provided a 100% guarantee on these loans, which enabled the accredited lenders to help those businesses that may not have met the requirements under CBILS.
Borrowers didn’t need to make any repayments for 12 months and the interest rates were low to ensure the maximum benefit at the height of the pandemic disruption.
1
Fees and interest
The government set the interest rate of BBL at 2.5% per annum. Lenders were also not permitted to charge any fees.
2
Personal guarantees
Lenders were not allowed to take a personal guarantee from limited-liability companies, meaning personal assets were safe.
Sole trader’s primary residence and vehicle also could not be pursued if the borrower defaulted on a loan.
3
What happens if I can’t repay my BBL?
Pay as You Grow measures for BBL borrowers were announced on 24 September 2020 by the government.
It gave businesses the option to:
- Extend the loan terms from six years to ten, at the same fixed interest rate of 2.5%.
- Request one six-month repayment holiday.
• Make interest-only payments for six months, up to three times throughout the term of the loan.
Lenders will let borrowers know their Pay as You Grow options three months before they need to start repaying their loans.
For more information please click here.
Further support businesses facing repayment difficulties
Business owners must remain accountable and responsible for any debt they take on.
If you are worried about the terms of finance under the CBIL or BBL schemes, you should speak to your lender first. Alternatively, you can use the resources below.
1
Business Debtline for England and Wales
Get free, confidential and independent advice on how to deal with debt problems.
The website also provides resources on dealing with business debts and fact sheets that can be downloaded from the library, such as what to do if a bailiff is coming to collect a business debt or if you are considering bankruptcy.
- Website
- 0800 197 6026
- A webchat service is also available on their website
2
Insolvency Service
This government agency supports those in financial distress by tackling financial wrongdoing and maximising returns to creditors.
It looks into cases of liquidation and deals with bankruptcy and debt relief restrictions orders and undertakings. For specific advice, you should speak to your local Citizens Advice Bureau, a solicitor, a qualified accountant, an authorised insolvency practitioner, any reputable financial adviser, or a debt advice centre.
- Website
- 0300 678 0015
- Online contact form
3
Lawyers for your Business (LFYB)
This scheme offers a free half-hour consultation with a member of the Law Society to pre-start and start-up businesses (trading up to 12 months). When contacting a solicitor for a free consultation you must tell them upfront that you are part of the scheme.
- Website
- 020 7405 9075 (Monday to Friday, 9am-5pm)
- [email protected] - please include postcode or town/city in the email
4
ICAEW Business Advice Service (BAS)
This service provides businesses with a free initial consultation from an ICAEW Chartered Accountant. You can find a chartered accountant in your area who offers this service through the online directory.
Providers such as Wilson Field Insolvency Practitioners are licensed and regulated under the ICAEW.
Next steps...
- If you are concerned you may not be able to repay your CBIL or BBL loan, you should speak to your lender as soon as possible.
- More information on loans’ terms and conditions can be found at the British Business Bank.
- Additional information and support can be accessed through The Law Society, ICAEW, Business Debtline for England and Wales and the Insolvency Service.
- CBILS and BBLS has now ended and been replaced by the Recovery Loan Scheme –for details click here.