Small Business Advice

BBLS And CBILS: What You Need To Know

19 Oct 2020

The Government has introduced a number of schemes to enable small and medium businesses to continue trading during the pandemic crisis – BBLS, the Bounce Back Loan Scheme and CBILS, the Coronavirus Business Interruption Loan Scheme. 


Their original aim was two-fold – survival and recovery followed by growth. However, as Coronavirus is moving into a second wave, the Chancellor has amended the scope of the schemes and added further measures


If your business took out one of the loans in their original form, or if you are now considering applying for funding, it’s important to understand the difference between the schemes and the changes that have taken place. 


At Accounts and Legal, our experienced accountants and business consultants can offer detailed advice on the right form of funding for your current circumstances and future plans, but we hope this brief guide will help you make the right initial decisions.



The Original Bounce Back Loan Scheme 

BBLS is aimed at smaller businesses, particularly those in early stage growth, and provides loans of 25 percent of annual turnover up to a maximum of £50,000.


The loans are guaranteed 100 percent by the Government and the interest rate is fixed at 2.5 percent for the term of the loan, with the first year’s interest covered by the Government.  The original loan term was a maximum of six years, but this has now changed (see below). 


No repayments are required in the first 12 months and there are no arrangement fees or early repayment charges.


You can apply online with lenders accepting self-certification and no requirement for guarantees. You can only apply for one BBLS loan. 


Commentators believe that, although BBLS provided a valuable cash injection for loss of turnover, the sum available was small and may not offer scope for growth beyond the original ‘survival period’. And, as a term loan, it offered little flexibility. 


Changes to BBLS

In September, the Chancellor announced a number of changes to the original BBLS scheme under the Pay as You Grow scheme, part of the Government’s Winter Economy Plan.  

The deadline for applications has been extended to 30th November 2020.


The maximum loan term has been extended from six to ten years. However, you can only choose six or ten years, no other term. 


Interest-only periods are available. If you are having problems meeting payments, you can request up to three interest-only payment periods of up to six months. However, you will end up paying more interest overall if you take this option. 


Payment holidays are available. If you are having serious difficulties meeting payments, you can request one payment holiday where you make no payments, including interest, for a period of up to six months. However, you must have made six repayments to qualify and you will also pay more interest overall. 


Apart from these changes, the other elements of BBLS remain the same.

small business

The original Coronavirus Business Interruption Loan Scheme

The CBILS scheme is aimed at small and medium businesses with up to 250 employees and turnover less than $45 million. You can borrow up to £5 million in three ways – term loan, invoice finance and credit facilities.


For term loans the funding amount is typically £750k-5m. The contract length can be 3-5 years and the interest rate could be in the range of 8-12 percent per annum.


For invoice financing the funding amount is typically £100k-5m. The contract length can be 2 years and the interest rate could be in the range of 8-14 percent per annum.


For credit facilities the funding amount is typically £100k-5m. The contract length can be 2-3 years and the interest rate could be in the range of 8-14 percent per annum.


The funds can be used for different purposes – mergers and acquisitions, refinancing existing loans or investing in future growth. That makes it a more flexible form of funding — and one focused on both recovery and growth. 


The loans are guaranteed 80 percent by the Government and the interest rate is determined by the lender based on the type of funding. No personal guarantee is required. 

The original scheme term was a maximum of six years, but this has now changed (see below). 


No repayments are required in the first 12 months and there are no arrangement fees or early repayment charges.


The Government does not charge businesses for the 80 percent guarantee and also covers the first twelve months of interest payments and fees.


The application process is more complex and will be tailored to the options you choose, so it’s a good idea to enlist the help of a professional. You cannot apply for CBILS funding if you already have an outstanding BBLS loan. 


Related: Deferral of VAT Payments for UK Businesses Due to Coronavirus

Changes to CBILS

In September, the Chancellor announced two changes to the original CBILS scheme as part of the Government’s Winter Economy Plan.


The deadline for applications has been extended to 30th November 2020. The maximum loan term has been extended from six to ten years. 


Apart from these changes, the other elements of CBILS remain the same.


Related: Everything you need to know about Creditors and Debtors

Extending your funding

If you find that you need additional funding, you have a number of options. If you have taken out a BBLS loan, you cannot apply for an additional BBLS loan, but you may be able to apply for CBILS funding. 


However, you cannot hold both types of funding. So you would have to repay your BBLS loan – with no early repayment fees required – before applying for CBILS funding. 


If you have taken out CBILS funding below the maximum allowance, you may be able to apply for additional funds under the scheme. This is likely to involve discussion with your lender with a further application process and credit checks. 


The Government has indicated that it will be introducing a new funding scheme in the New Year, although details have not yet been announced. Commentators believe that it may be some form of the Enterprise Guarantee Scheme (EFG) and will replace CBILS. 

start up

Accounts and Legal can help 

Clearly, these are complex issues and require thorough consideration before you take any final decisions. Our small business specialists can help you identify the type of funding that is most suitable for your business, as well as helping with cash flow, financial forecasting and a host of accounting and legal issues. 


If you would like to speak to a small business adviser, please contact us on 0207 043 4000  or info@accountsandlegal.co.uk


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Chris Barnard

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Head Accountant in Brighton

0127380 8000

About the author

Hello there! My name is Chris. 

Since graduating with a business degree 10 years ago I have been helping businesses grow, by sorting their finances and providing great advice.

This resulted in 2015 being recognised in Accountancy Age's 35 under 35 and a year later.

In 2016 awarded the New Practitioner of Year, at the British Accountancy awards.

I specialise in helping technology and creative businesses get a grip with their accounting and tax. It can be a minefield, with an endless count of buzzwords and acronyms. 

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