Coronavirus: The govt's loan scheme for businesses explained

  • Explain how the CBILS works
  • Identify who is eligible under CBILS
  • Explain challenges that exist within the scheme

There was, initially, some confusion over to whom the government would guarantee these loans, but it has become abundantly clear – in some cases leading to the criticism of banks – that the borrower “will always remain 100 per cent liable for the debt”.

For those hoping to access any of these finance products, the government has worked with lenders to create more attractive terms for borrowers.

The firms applying will not have to pay any guarantee fees to access the scheme; the lender will cover this cost.

The Government will then pay lenders a business interruption payment, covering the first 12 months of interest payments and any fees which the lender may ordinarily levy on the borrower.

This is designed to allow small businesses to benefit from lower initial repayments and a lack of upfront costs.

Who are the lenders?

The application process will vary from business to business but begins with deciding which kind of finance or loan facility each business requires.

Not every one of the 40 accredited lenders will offer each of the finance options in every region of the UK meaning that, often, a good starting point is a visit to the British Business Bank website dedicated to the CBILS for Small Businesses and Advisors. 

This selection process will show the lenders who offer the required finance in the business’s region.

For instance, there are 14 accredited lenders for businesses looking for term loans in London, whereas in every region apart from Northern Ireland, Santander is the only option for firms who are looking for overdraft facilities. 

Once the lender - or lenders - have been identified, the borrower is then advised to approach the lender themselves, ideally through the lender’s website.

The lender will then make a decision on the application and retains the authority to approve or deny the loan application at their discretion.

If the lender can offer you a loan on normal commercial terms outside of the scheme it will. 

This has been source of some consternation for small businesses who complain that as a result they are no longer entitled to the favourable repayment terms which the government have announced.

There has also been some criticism that banks have steered customers and applicants to take out their loans outside of the scheme’s bounds, allowing the banks to charge interest rates - sometimes upwards of 20 per cent. 


Questions appear on the last page of this article.