Business owners need clarity on the risk of taking a CBIL, says Purbeck Insurance Services

Business owners need clarity on the risk of taking a coronavirus business interruption loan (CBIL) as concerns are raised over the security they may have to provide – their home and other personal assets – before the lender raises their own claim from the government’s £330bn fund, according to Purbeck Insurance Services.

Todd Davison, MD of Purbeck Insurance Services said: “In many cases, when business owners have used the Enterprise Finance Guarantee, which the Coronavirus Business Interruption Loans Scheme (CBILS) is temporarily replacing, they have had to stand behind the funding facility by way of personal guarantees. 

“We need clarity from the Government over whether this will be the case under the revised CBILS as administered through its delivery partners.   Our concern is that UK entrepreneurs will in effect be providing a large portion of the £330bn security pledged in favour of their lender. This means if their business fails, the lender will be able to claim their home and savings to settle the loan before they seek a claim through the CBIL scheme. 

He added: “We must also consider the recent cuts to Entrepreneurs’ Relief announced in the Budget.  Therefore, for many, both sides of the risk/reward equilibrium are being tested for UK entrepreneurship. 

“The measures are positive for UK SME, but there should be increased transparency around the lending practices deployed under such schemes.”

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