CLBILS – The Covid-19 Large Business Interruption Loan Scheme

What is it?

CLBILS is the new government backed lending scheme for larger businesses which launched yesterday, 20 April 2020.

CLBILS is essentially the bigger brother of the existing CBILS scheme, under which smaller SMEs can apply for interest free loans of up to £5m. CLBILS fills the gap that had previously existed between CBILS for SMEs and the Bank of England’s Covid-19 Corporate Financing Facility (CCFF) under which the BoE bought commercial paper directly from very large investment grade businesses.

CLBILS is for businesses with a turnover over £45m based on the last set of annual accounts, whereas the existing CBILS programme is for businesses with a turnover under £45m.

The loan sizes are up to £50m for businesses with a turnover over £250m and up to £25m for businesses turning over £45m - £250m.

Like CBILS, the loans are 80% guaranteed by the government via the British Business Bank, but are actually issued via participating lenders.

Who is eligible?

In order to apply you must:

• be a UK-based business, with annual turnover over £45m;
• have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short-to-medium term difficulty; and
• not have received a facility under the CCFF programme.

Key differences between CBILS and CLBILS

Other than the size of the eligible businesses and loans, the key differences between CLBILS and CBILS are:

• Pricing – under CBILS the government will cover the cost of the first 12 months of interest and any fees, whereas under the new CLBILS programme there is no such direct payment of costs by the government. However, the lenders are obliged to pass on a proportionate reduction in pricing to reflect the capital and risk benefits to the lender of the CLBILS programme. It remains to be seen what sort of pricing is available to borrowers in practice;
• Tenor – under CBILS, loans of up to six years are available, whereas under the new CLBILS programme the maximum term of loans is three years; and
• Lenders – currently there are far fewer lenders which are part of the CLBILS scheme than the CBILS scheme – whilst there are over 40 accredited lenders for CBILS, the only accredited CLBILS lenders so far are Barclays, HSBC, Lloyds, Santander and Danske. Whilst we would expect more lenders to join the scheme (NatWest clearly intend to be a part of it so we would expect them to be added very shortly) it seems likely that there will not be as many lenders as there are under CBILS.

How do I apply, and will I be accepted

If you think you will be eligible the easiest route to apply is via your existing contact at your lender, assuming that they are part of the scheme. You can check which lenders are part of the scheme here, and if your current lenders are not part of the scheme then you will need to contact a lender who is.

Whilst the CBILS programme was initially dogged by (justifiable) bad publicity and low acceptance rates, subsequent changes have made the scheme more accessible and have increased acceptance rates. However, we are aware that few lenders are currently considering applications from new customers, and therefore most potential CBILS borrowers are limited to applying to their existing bankers. It remains to be seen if this will also be the case with CLBILS.

If you have any queries in relation to any of the above or any other queries around financing your company at this time, please contact Ed Hobbs.