Mythbusting CBILS: A Q&A with British Business Bank

April 29, 2020
Mythbusting CBILS: A Q&A with British Business Bank

On the 17th March, Chancellor of the Exchequer Rishi Sunak unveiled a package of guarantees worth £330 billion aimed at helping ease the unprecedented crisis facing all businesses during the Covid-19 pandemic. In the announcement he said “Today, I am making available an initial £330 billion of guarantees – equivalent to 15% of our GDP. That means any business who needs access to cash to pay their rent, the salaries, suppliers, or purchase stock, will be able to access a government-backed loan."

One element of the package was the Coronavirus Business Interruption Loan Scheme (CBILS). This scheme was designed to give an 80% taxpayer-backed guarantee against loans given to businesses in urgent need of liquidity, with around 40 initial lenders taking part. Driving the scheme is the government owned British Business Bank, who are responsible for guaranteeing the loans and accrediting new lenders.

There’s been a huge amount of media coverage in the subsequent weeks, with SMEs, lenders, politicians and commentators criticising elements of the scheme. The most persistent criticism has been around how slowly the money has been distributed, especially compared to similar schemes in other countries. There’s also been a misunderstanding around how much of the £330 billion would be lent through CBILS and the new Coronavirus Larger Business Interruption Loan Scheme (CLBILS).

To clear up some of the misconceptions about CBILS, we spoke to the British Business Bank about the nature of the scheme and what they are doing to help SMEs get the finance they need.

There’s been some confusion around the amount of money available in CBILS, with media outlets reporting a “£330bn coronavirus loan scheme”. Could you please clarify how the scheme works and the amounts involved?

There was a £330 billion business support package announced that included the Bank of England scheme, the Covid Corporate Financing Facility (CCFF), which is for big businesses and makes up the vast bulk of that package.

CBILS was originally announced at the Budget as a £1.2 billion scheme. The Chancellor subsequently said, however, that it would become demand-led, and it has already surpassed its original size, demonstrating that the demand from smaller businesses is there.

Based on the most recent figures just announced £2.8 billion has been lent to around 16,000 businesses. There have been 36,000 completed applications – up about 120% in a week, of which between 40 and 50% have been approved.

Although the rate of loan approval has increased, what is British Business Bank doing to get things moving even faster?

It is up to the lenders to deal directly with borrowers and to make lending decisions. The credit decision is fully delegated to the lender and the lender approves the loan. In comparison, our role is supplying the guarantee, so that banks and other lenders have the confidence to lend to businesses - we’re removing a lot of the risk for them with the aim of helping turn a ‘no’ decision into a ‘yes’.

Our other function is to record these loans to make sure we’re protecting taxpayers’ money, because at some point there might be a claim on the guarantee.

We’re working with lenders to further automate the system, so that our systems will talk to those of the lenders systems automatically. In advance of that being in place – and we’re fairly near to the end of the process - we’ve given the highest volume lenders a longer period before they need to register loan details into our system. This means they can make loans, process the applications, and offer the money to businesses quickly so we do not expect this to be a constraint on their delivery of the scheme. They will then batch them up and will be able to upload them in bulk.

We’ve seen new lenders be added to the scheme, but there’s also been criticism that more lenders, particularly FinTechs, haven’t been accredited faster. What have been the challenges from BBB’s side in getting new lenders into the scheme?

More than 80% of the UK’s smaller businesses have an existing finance relationship with the almost 50 CBILS accredited lenders.

We have been accelerating the onboarding of new lenders at pace to further extend the scheme’s reach. That’s important because it means smaller businesses get more choice.

Since CBILS launched, we’ve already approved an additional 10 lenders for accreditation, including ThinCats, Paragon Bank, IGF, Funding Circle, OakNorth Bank, Starling Bank, Cynergy Bank, The Co-operative Bank, Coutts and AIB (GB)/AIB (NI).

Three additional lenders, Arkle Finance, Close Brothers and Secure Trust Bank, who were recently accredited under the Enterprise Finance Guarantee, have also been accredited under CBILS.

We’ve significantly increased the size of our accreditation team to more than 25 people to manage the volume of interest. We continue to review applications from a wide range of lender types – from PRA-regulated banks, to platform lenders, debt funds, invoice finance lenders, asset finance lenders and responsible finance lenders, and we expect to announce that further lenders have been accredited in the coming days.


For more information on CBILS and the effect Covid-19 is having on the UK economy, check out our Covid-19 Impact Barometer that has regular insights from our Business Information Graph (B.I.G.)

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