Business Insights

It is still not too late to apply for a CBILS loan, providing you are a Limited Company or LLP registered in the UK, as applications are being considered up until 31st March, at which point it will be replaced by a new Recovery Loan scheme as announced in the recent budget.

In certain circumstances, you can use a CBILS facility to refinance existing debt. For example, where you are seeking to put your business on a more stable financial footing and/or improve your working capital position. However, you will need to go through the application process in relation to a CBILS facility and you will need to fulfil the eligibility criteria.

To be eligible for a facility under CBILS, your business must meet the eligibility criteria for the Scheme, which includes:

  • be UK-based in its business activity;
  • have an annual turnover of no more than £45 million;
  • have a borrowing proposal which the lender would consider viable, were it not for the current pandemic;
  • self-certify that it has been impacted by the coronavirus (COVID-19); and
  • not be classed as a business or ‘undertaking’ in difficulty.

Refinancing can be undertaken with or without an increase in the original borrowing and any refinancing will be treated as a new facility. When using a CBILS facility to re-finance an existing commercial facility with the same lender, the lender will be subject to certain limits. However, if the existing debt is held with another lender to the one you are seeking to obtain a CBILS facility from, those lender limits no longer apply.

Under the rules you can use a CBILS loan to refinance any assets or equipment which may or may not be on finance to raise capital or to free up cashflow to consolidate loans/finance to reduce your monthly outgoings or to reinvest back into the business. 

Using the CBILS loan as a refinancing facility can provide a beneficial alternative to raising bank finance by securing the finance against the asset/equipment. The first 12 months interest would be paid for by the government and the total interest could be reduced by 20% to 50% depending on the term. 


  • Free up capital 
  • Reduce monthly expenditure 
  • Improve the rate of finance/term the asset/equipment was originally on 
  • First 12 interest free paid for by the government 7
  • Personal Guarantee from the government up to 80% 

For example, in the case of a coach company which chose to refinance one of their vehicles to free up cashflow in the business. If they had previously taken out finance on the vehicle 2 years previously and were paying £6,708.37 per month, by refinancing the vehicle with a CBILS refinance facility their payments could be reduced to £6,240.00 with the government paying interest over the first 12 months equating to a saving of £10,500.00. They would pay £5,373.00 capital for the first year and would save approx. £1,333.00 per month in the first year followed by £400.00 per month the year after. 

In a further example, a farmer might need to refinance £200,000 worth of agricultural equipment. By refinancing through a CBILS facility and successfully placing the solution at a rate of 3.6% and giving him £175,000 over a term of 3 years, the government would pay 33% of the total interest charged, which would save the farmer a total of £5,197.49 in interest. 

By refinancing the equipment and with the government paying 12 months interest it typically reduces the interest to around 2% on a 3-year deal and 2.4% on a 5-year deal. The funder has appetite to refinance over offering a typical unsecured loan, as they have security against the asset/equipment and the government’s personal guarantee of up to 80%. 

If you have unencumbered vehicles, plant, machinery we might be able to help. If you think you think you might have assets that could qualify then please just drop us a line back and we will explore for you. However the great news here is it doesn’t have to be a refinance. 

Alternative Finance Group Ltd is an independent commercial finance broker not a lender, as such we can introduce you to a wide range of finance providers depending on your requirements and circumstances. We are not independent financial advisors and so are unable to provide you with independent financial advice. Alternative Finance Group Ltd may receive payment(s) or other benefit from the finance provider if you decide to enter into an agreement with them.