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Coronavirus Business Interruption Loans Scheme

The Coronavirus Business Interruption Loan Scheme (CBILS) is a part of the support package aimed at enabling SMEs (turning over less than £45m) to access finance. It is based on the Enterprise Finance Guarantee and, like that scheme, are really aimed at companies that would not otherwise be able to secure commercial finance and as such will not be right for every company (or even the majority). Yesterday though, the Government did issue a clarification on the subject of personal guarantees.

“Whether a lender requires a personal guarantee for a loan supported by the (CBILS) is at the discretion of the lender, who is accredited by the British Business Bank. However, a lender is not allowed to take a personal guarantee against a borrower's principle residence under the scheme. So even if a personal guarantee is required under the lender's credit policy, it cannot be taken against the borrower's home.”

This addresses an issue that had been brought to our attention, where a bank had requested such a guarantee. Some lenders have announced that they are not going to require personal guarantees on loans under CBILS (of any size). The major high street banks are all participating but there are a number of smaller challenger banks too, so being refused by one may not mean that others will take the same view. More information can be found here.