I was recently asked what the differences were between CBIL and Bounce back loams. Where there are some similarities, there are also feature which make them very different.

In simple terms, it is the amount you can borrow, but there are also differences in how the government guarantee works.

Under a Bounce Back Loan, you can borrow a maximum of £50,000 or 25% of your annual turnover, whichever is the smaller. A Coronavirus Business Interruption Loan (CBIL), allows you to borrow up to £5m.

The government guarantees 100% of a Bounce Back Loan to the lender, whereas for a CBIL, it only guarantees 80%. This means the lender is likely to ask more questions and want to see more supporting information if you apply for a CBIL.

A personal guarantee from a director is not required for either facility, but other forms of company security may be asked for under a CBIL. This could be a charge over property, debtors, stock or any other assets the business owns. You should always seek advice before pledging business assets as security as it could limit your ability to borrow from other lenders in the future.

The interest rate for a Bounce Back Loan is set at 2.5%, whereas, the lender agrees a commercial rate of interest for a CBIL, so it could vary from lender to lender depending on how they view the risk and their policies on interest rate margins. Time spent doing some comparisons is well spent.