Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether he plans to defer the first payments of the Coronavirus Business Interruption Loan Scheme, due in April 2021, in response to the financial pressures on businesses resulting from the covid-19 outbreak.

Under the Coronavirus Business Interruption Loan Scheme (CBILS) rules, capital repayments start immediately, unlike the Bounce Back Loan Scheme (BBLS) where no repayments are due from the business during the first 12 months of the facility. As a result, many CBILS borrowers started repaying their facilities from the date they were taken out.

Following the Chancellor’s announcement at the Winter Economy Plan, to help businesses repay their CBILS facilities the Government have amended the CBILS rules to allow lenders to extend loan terms from six to a maximum of ten years where the borrower is in difficulty and where the lender judges that an extension would help their situation. I should be clear that CBILS term extensions will be offered at the discretion of lenders, unlike the “Pay As You Grow” options for Bounce Back loans. Such extensions would therefore be given in line with a lender’s forbearance policies.

Any business concerned about their ability to repay their finance should discuss this with their lender in the first instance. Given loans under CBILS are varied and resemble more traditional commercial lending, CBILS borrowers are more likely to benefit from tailored engagement with their lender if they have concerns about repayments. Lenders have an ongoing relationship with CBILS borrowers and will be best placed to provide support tailored to an individual businesses circumstance.