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What’s the difference between CBILS and the Recovery Loan Scheme?

Borrower Coronavirus Updates

What’s the difference between CBILS and the Recovery Loan Scheme?

Updated: 9 June 2021

In the recent budget announcement, the Chancellor confirmed the end of the Coronavirus Business Interruption Loan Scheme (CBILS) on 31st March 2021. After this date, the Government’s new Recovery Loan Scheme (RLS) will open for applications on 6th April 2021. To help you decide which is best for you, we review what the Recovery Loan Scheme has to offer and how it compares to CBILS loans.  

Comparison of the features of Coronavirus Business Interruption Loan Scheme (CBILS) and the Recovery Loan Scheme (RLS)

To help you compare the differences between the schemes, we’ve put together a handy comparison table below. 

FeatureCoronavirus Business Interruption Loan Scheme (CBILS) Recovery Loan Scheme (RLS)
Loan amount£50,001 – £5 million£25,001 – £10 million
Loan term2-6 years2-6 years
Government pays first 12 months’ interest on your behalfX
Government pays upfront fee on your behalfX
No personal guarantee required on loans up to £250,000
Minimum annual turnoverOver £200,000Over £100,000

Benefits of a Funding Circle Coronavirus Business Interruption Loan Scheme (CBILS) loan

The Coronavirus Business Interruption Loan Scheme (CBILS) was launched at the start of the pandemic, and therefore the features it offers are specific to the issues that business owners were facing at the time. At Funding Circle, we offer CBILS loans of £50,001 to £500,000 with a 12-month repayment holiday as standard on all of our CBILS loans – a fantastic extra benefit on top of the standard features of  the scheme.

The key benefits of a Funding Circle CBILS loan are:

Government pays the first year’s interest and upfront fee on your behalf

With a CBILS loan, the Government will pay the first year’s interest and upfront fee on your behalf. This feature is not part of the Recovery Loan Scheme, which means a CBILS loan can save you a significant amount in comparison.

No repayments for 12 months

A Funding Circle CBILS loan also has the added benefit of a 12-month repayment holiday for added flexibility. We also don’t charge early repayment fees on our loans, so if you take out a CBILS loan but want to pay it back within the 12-month repayment holiday period, there won’t have been any costs to you.

Benefits of Recovery Loan Scheme (RLS)

The Bounce Back Loan Scheme (BBLS), Coronavirus Large Business Interruption Loan Scheme (CLBILS) and CBILS are all coming to an end at the end of March. After this, the Recovery Loan Scheme (RLS) will come into force. It shares some aspects with previous schemes as the Government looks to ensure a wide range of businesses continue to have access to the finance they need.

As a result, the key benefits for the scheme are how much you can borrow (£25,001 to £10 million) and its turnover requirements. 

Lower turnover requirement

Unlike the CBILS scheme, which requires you to have an annual turnover of more than £200,000 to be eligible, the Recovery Loan Scheme has a lower turnover requirement of £100,000. This allows smaller businesses to access funding.

Borrow £25,001 to £10 million

With a Recovery Loan, you can still borrow a large amount. The £25,001 to £10 million available far eclipses the £50,000 that has been available through BBLS. So if you want to borrow more for your business, and CBILS isn’t available to you, you may want to look to take out a Recovery Loan.

What’s right for my business?

As we’ve seen from the above, both CBILS and the Recovery Loan Scheme have their own unique benefits. With CBILS some of the costs of the loan are paid by the Government, and Recovery Loans offer a higher loan amount to a broader set of businesses.

If you meet the eligibility criteria for CBILS, it can help with its interest and fee savings. Plus, with a CBILS loan from Funding Circle, that extra 12-month repayment holiday provides you with greater flexibility. Since the scheme is due to end 31st March 2021, if you do feel CBILS is the right choice for your business, you’ll want to start an application as soon as possible to make sure you can benefit from the scheme.

However, if CBILS isn’t available to you because you own a business with a turnover lower than £200,000, and you want to borrow more than the £50,000 available through BBLS, the Recovery Loan Scheme may suit you better. Remember though, the scheme won’t be available until 6th April 2021 (and may not be available from some providers until after this date), so if you want to apply, you’ll have to wait until it becomes available.

Whichever scheme you choose, provided you borrow under £250,000, there’ll be no personal guarantee on your loan.

It’s important to remember that when taking a loan, your business is liable for the full loan amount. The CBILS, BBLS and RLS schemes provide a guarantee to the lender, not to the business.

All information is correct at time of publishing. While we want to help as much as we can, the information and documents found here are provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here.If you have any questions, please speak to your professional adviser or seek independent legal advice.

CBILS and BBLS are managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. They are not authorised or regulated by the PRA or the FCA. Visit british-business-bank.co.uk

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