The Coronavirus Business Interruption Loan Scheme (CoBiLS) explained

The following are extracts from advice by Paul Basham, former finance director for the HTA, to his clients.

It appears most loans to businesses with sales under £41m will qualify for The Coronavirus Business Interruption Loan Scheme (CoBiLS).  See

Coronavirus Business Interruption Loan Scheme (CoBILS) now guarantees borrowing up to £5M (from £1.2M last week). 

They will be on “advantageous terms” - no interest for the first six months – NOT interest free for the entire term. 

In the budget this was announced as an 80% Government-guaranteed loan.  The guarantee is the Government’s underwriting promise; not a promise that you will qualify for a loan. 

This scheme will almost certainly be through banks

This scheme will almost certainly be through banks and here is the catch; the bank will STILL be taking the risk on the 20% and experience says that they will find it hard to relax their lending criteria; we have seen this before. 

Expect three things:

  1. If you thought you could borrow £20K in January, you can probably reset your expectations at £100K. The simple 80/20 rule. 
  2. If the bank would require a Personal Guarantee in January, they will probably still require one on the 20% now.
  3. If you were not creditworthy in January, you might find out that you are still not in April.

If the 80% doesn’t move to a 100% guarantee this may not turn out quite as the Chancellor – and businesses want it – so expect some delays and revisions.  As ever, the devil will be in the detail, which we can expect early next week but the situation is fluid and we could see more information within 48 hours. 

And remember, this is a loan, so you need to pay it back.  There is no substitute for looking hard at your cost base.  These loans buy you time to assess the cost-benefit of the tough decisions.  And to retain your key staff. 

With regard to growers

It looks like growers will be eligible for the loans but on a restricted eligibility basis (presumably something to do with State Aid rules).”

Sector specific assistance and cash grants

Paul Basham continues, Sector specific assistance has been announced for retail, hospitality and leisure. 

As well as 100% Business Rates relief, which has been extended to all businesses in these sectors, irrespective of size (measured by rateable value), it was announced that pandemic insurance policies would be activated. 

If you do not have business interruption insurance that covers pandemics, there will be cash grants available – YEP, FREE MONEY; £25K if your rateable value is under £51K, and £10K if you pay less than £15K per annum in business rates.  This is helicopter money.  Expect more, possibly aimed at the self-employed next week. 

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