Question to the Department for Business, Energy and Industrial Strategy:

To ask Her Majesty's Government whether the requirement on the British Business Bank website that Coronavirus Business Interruption Loan Scheme loans must ‘have a borrowing proposal which the lender would consider viable, were it not for the pandemic’ means that loans required to assist with the situation caused by the pandemic and lockdown are not eligible; and if so, how that has been communicated to businesses.

The Coronavirus Business Interruption Loan Scheme (CBILS) provides financial support to small and medium-sized businesses affected by coronavirus. In order for a business to be eligible for the CBILS, it must be considered “viable” by the lender prior to the onset of Covid-19. The lender must consider that the applicant (or its business group) has a viable business proposition determined by the lender’s underwriting policies.

The viability test was amended in April to remove the requirement for lenders to include a ‘forward-looking’ element, which required an assessment of whether the business can trade out of the Covid-19 crisis. This means that any concerns over its short-to-medium term business performance due to the uncertainty and impact of COVID-19 cannot be taken into account when a lender is considering an application for loan. The applicant however must still satisfy the other eligibility criteria of the CBILS.

For smaller value facilities (e.g. those of £30,000 or below), in determining the eligibility of the applicant, lenders may decide to determine the applicant’s credit worthiness based on its internal credit scoring models.

Changes have also been made to the eligibility criterion which previously required the applicant (or its business group) to have a business proposition that can reasonably be expected to enable it to meet its repayment obligations under a proposed facility.

Since the Coronavirus Business Interruption Loan Scheme was launched, Government has listened to feedback from stakeholders and made changes to ensure that loans are processed as quickly as possible and businesses get the support they need. These changes include:

• Extending the scheme so that all viable small businesses affected by Covid-19 are eligible;
• Removing previous restrictions on the following groups to enable them to access the CBILS, subject to other eligibility criteria being met: Employer, professional, religious or political membership organisations and trade unions;
• Removing the ability for lenders to ask for personal guarantees for loans under £250,000, and reducing the personal guarantee for loans over £250,000 to 20% of the outstanding balance after recoveries;
• Introducing technical changes to ensure that applications will be processed faster;
• Removing the forward-looking viability test; and
• Removing the per lender portfolio cap.