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Good News For CBILS Scheme

Eligibility for The Coronavirus Business Interruption Scheme (known as “CBILS”) became wider on 30 th July 2020.

Previously it excluded any applicant deemed to be an “undertaking in difficulty” on 31 st December 2019.

This expression comes from the EU where, broadly speaking, it refers to companies that have amassed losses greater than half their capital. It also excluded any company subject to insolvency, or in the process of repaying rescue aid, or in the process of implementing a debt restructure.

The exclusion relating to losses has been removed. The other exclusions remain.

The same change has not been made to the Bounce Back Loans Scheme.

The decision has not been taken lightly, because it was argued initially that loss-making businesses are much more likely to fail. This means the government guarantee that stands behind the lenders in the Scheme is likely to be used much more often. In other words, the tax payers of the country will ultimately pay for this change.

The counter argument is high growth companies prioritising expansion over profit are the type of organisations we need, if the economy is to recover quickly from the damage done by the pandemic.

They are more dynamic, and bring more innovation to the marketplace. Their growth emphasis drives them to employ new people, which is seen as another benefit.

They will still have to meet the lenders own underwriting standards, so we should not expect a huge influx of new business from this sector. CBILS is due to finish on 30 th September 2020, which is a further stumbling block, but it is still a positive change.

It shows the government is trying to make as much support available as they can to every part of the commercial world.

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