How to access government support – before it’s too late

Business Insights

SMEs can still secure fee and interest-free funding through the Coronavirus Business Interruption Loan Scheme until 30 September.

Applications for the government’s Coronavirus Business Interruption Loan Scheme (CBILS) are set to close at the end of the month. However, the British Business Bank has told lenders that any application started by midnight on 30 September will be eligible for processing – even if it wasn’t completed in its entirety. In other words, as long as you start an application before the deadline, you’ll still be eligible to complete it after the deadline.

What is the Coronavirus Business Interruption Loan Scheme?

With COVID-19 having caused disruptions in almost every sector, SMEs across the UK are looking for funding to ease the pressure on cash flow and get back on track. The CBILS was introduced by the government to provide this essential financial support.

Here are some key features:

  • SMEs can apply for between £50,001 and £5 million, repayable over up to 6 years
  • This funding comes with an 80% government-backed guarantee
  • The government will cover interest and fees for the first 12 months

Why should you consider starting a CBILS application?

With most lockdown restrictions lifted over the summer, your business is probably back on track and getting busier by the day. As the wheels of industry start turning at full speed and we approach the festive season, you could be running at full capacity for the first time since February 2020.

But with cash reserves depleted from months of COVID-19 disruptions, you could struggle to keep up with this ramping demand. A CBILS facility can provide the working capital your business needs to get back to a stable cash position and continue to thrive through 2021.

What kinds of funding are available through the CBILS?

There are four main types of funding available through the CBILS: overdrafts, term loans, invoice finance and asset finance. Each of these has their place to solve a range of cash flow challenges for a variety of different businesses, plus they can also be combined.

For example, you might want to solve an immediate problem with a CBILS loan and access an ongoing working capital solution through invoice finance. If you urgently need to purchase equipment, asset finance might be a good fit and could be supplemented with an overdraft to provide a little breathing room for other monthly costs.

Here’s a quickfire summary of both a one-off and an ongoing funding solution…

An instant working capital injection through a term loan

Loans are probably the simplest and most well-understood funding solution available through the CBILS. It’s a fixed amount of money (between £50,001 and £5 million) borrowed for a fee and then paid back (with interest) in regular installments over an agreed period of time.

When you repay a loan, the amount you pay is made up of the principal (i.e. the funds you borrowed) and interest (paid on the funds you borrowed). With a CBILS loan, your repayments will only include the principal for the first 12 months because the government makes the interest payments on your behalf. After the first 12 months, your monthly/weekly repayments will be made up of both the principal and the interest.

Ongoing cash flow support through invoice finance

There are two kinds of invoice-backed finance solutions available through the CBILS, both up to £5 million. There’s straight up invoice finance as well as revolving credit facilities which work in a fairly similar way.

Think of your outstanding invoices as a tank full of working capital. Having an invoice-backed CBILS facility lets you open the tap whenever you like by advancing the funds already owed to you by your debtors. When your invoices are paid, the tank gets topped up again so you can continue the cycle.

Normally you’d pay service fees plus interest on the funds you’ve advanced for this kind of invoice-backed funding. But with a CBILS facility, the government pays the fees and any interest on your behalf for the first 12 months making it incredibly affordable.

How can you apply for CBILS funding?

The British Business Bank’s website has a complete list of accredited CBILS lenders including mainstream banks, business finance companies and fintech business lenders. If you need a hand deciding what kind of CBILS funding is right for your business – or which lender is best suited to your needs – it’s always worth chatting to your accountant, broker or financial advisor.

If you’re interested in starting your CBILS application with MarketFinance or simply want to find out more, go to before 30 September.

Robyn Schuleman

Senior Content Writer