Startups Magazine
Now Reading
Coronavirus business interruption loan scheme
Startups Magazine

Subscribe today

Startups Magazine

Coronavirus business interruption loan scheme

by
March 27, 2020

Kevin R Smith is an international business and finance consultant…

What normally takes companies, and the government, many months to decide and then act upon is having to be done by one and all in a matter of days. This inevitably leads to the overall strategy being agreed, and even started to be implemented, but whilst the finer details are still being worked on with regard to how to deliver it in reality.

These circumstances inevitable lead to some confusion, but I for one think that criticism is unjustified as the government is trying to reassure businesses and employees that they will be protected, but it is simply not possible for the fine print to keep up with the big plan when things change so rapidly. However, within a matter of days the broad plans are being refined and the terms are starting to become better understood. Sadly, for many people, understanding the small print can be every bit as difficult as double guessing what the exact rules might have been when there was no small print to see.

What are the basic rules of CBILS?

These loans are to be provided by the British Business Bank, which is effectively part of The Treasury, but they will be accessed via around 40 participating lenders, including all the high street banks. The government will guarantee 80% of the loans, but that means that the actual lender will still be liable for 20% of any losses, and as such they will make their own assessments of the borrower.   

The loans are intended to alleviate financial problems resulting from the coronavirus situation and are to be made available to all qualifying SMEs, but the key word here of course is ‘qualifying’. The main qualifying criteria are:

  • Must be UK based with a turnover not exceeding £45m
  • Maximum loan value £5m
  • Facility covers a wide range of facility types including term loans, overdrafts, invoice financing, and asset financing
  • Interest free to the borrower for the first 12 months
  • The borrower is liable to repay the full 100% of the loan plus any interest
  • The business must be an existing business that was viable prior to any impact from coronavirus
  • The business must have been trading for two years
  • The loans are intended to be made available as quickly as possible
  • The government has not called for any security such as directors guarantee or charges on assets on the first £250,000 of any loan

What is the reality of accessing any CBILS loans?

It seems that already the frustration is setting in, as many business owners were expecting CBILS to be almost something of a free giveaway without any of the normal loan application procedures to go through. However, some of the terms above, most notably that it is only available to existing, viable businesses has already dashed the hopes of many smaller companies, and this was compounded by the two years trading requirement.

The point that has caused even bigger frustration amongst those businesses that are eligible is that whilst the government itself has not called for any security, many of the individual lenders are, and so any borrowers will need to compare one lenders terms with another. However, in reality, most businesses will be confined to their existing bank because of the time and pain required to go through the whole Know Your Customer (KYC) and Anti Money Laundering (AML) procedures with any new lenders.

Whilst the lenders are being encouraged to streamline the application process and speed up approval and disbursement of funds, the borrowers will still need to provide business plans, accounts, financial forecasts, and all the other normal loan application documentation. Even if companies have up to date information to hand this whole process will inevitably take time.

See Also
When global labour market data is released, headlines tend to fixate on a single metric: unemployment. This year is no different. According to the latest figures from the United Nations and the International Labour Organisation, global unemployment remains relatively stable at just under five per cent. At face value, this suggests a labour market that is holding firm despite economic uncertainty, geopolitical instability and technological upheaval. In reality, it masks a serious and underreported problem: the true global jobs crisis is not a lack of work, but the growing scale of informal work. More than 2.1 billion people worldwide are employed in the informal economy, including misclassified workers operating outside effective regulatory coverage, where employment is typically unregistered, contracts are absent or unenforced, and access to labour rights and social protections is limited or non-existent. That represents a large portion of the global workforce. If unemployment reveals how many people cannot find work, informality shows how many are working without protection or long-term opportunity. Informal work is often associated with developing economies or unregulated sectors. However, this form of work is increasingly occurring within developed economies and regulated sectors, hidden within otherwise legitimate, fast-growing small and medium-sized enterprises – and this is often unintentional. For both businesses operating solely in domestic markets and those that have expanded abroad, adopting new workforce models and attempting to respond to rapid technological change, the crisis of informality is emerging in three key areas. The first is worker misclassification. Individuals are engaged as independent contractors but operate in practice like employees – working fulltime, at set hours, for years at a time. This is particularly prevalent in gig and platform-based roles, where algorithms determine pay, hours and performance without considering employment rights. Gig and platform work often presents as flexible and empowering, however, in practice, many platforms exercise employer-like control over payment, performance management, hours, and length of engagement, while explicitly avoiding employer obligations such as tax filings and the provision of statutory benefits like annual leave and healthcare. The result is a growing cohort of workers who fall between legal categories, carrying the risks of self-employment without the autonomy or protections that should accompany this mode of work. The second area is cross-border remote work, where informality can inadvertently arise. With post-COVID remote working models here to stay, companies are directly hiring overseas talent, assuming that because the worker is not based in the company’s home country, local employment laws do not apply. Where employment is not properly registered (whether by the employer and/or employee), local labour law is not applied, or social security obligations are misunderstood or ignored, these arrangements can slip into a form of modern informality, even where the relationship appears to be formal on the surface. This is often the point at which organisations begin to seek external guidance. In many cases, neither party fully understands the legal implications of the arrangement, which leaves both employer and worker exposed. We frequently see organisations approach us when a specific issue surfaces, such as payroll inconsistencies, questions around benefits entitlement, or concerns raised by the workers themselves, including registration process failures. Business leaders should also be aware that permanent establishment risk can arise if a remote employee is deemed to represent the company locally, which can trigger corporate tax obligations. Social security errors can happen when contributions are not made correctly in either jurisdiction, leaving workers without coverage and employers facing backdated liabilities. Meanwhile, employment law conflicts can emerge when contracts fail to meet the requirements of the host country regarding notice periods, benefits or termination rights. The third driver of informality is structural. These arrangements are becoming more common as artificial intelligence and evolving workforce models outpace regulation. Businesses are innovating at speed, but legal frameworks are struggling to keep pace. The UK’s Employment Rights Act offers a clear case study of the direction of travel. Worker protections are expanding, classification rules are tightening and enforcement is becoming more coordinated across agencies. Informal arrangements that once sat in legal grey areas are moving firmly into view and what was previously tolerated is falling under scrutiny. The challenge is that informality is rarely a deliberate choice. For many growing organisations, it becomes the default because compliant pathways are complicated and difficult to navigate alone, particularly across multiple jurisdictions. Legal advice, payroll, tax, HR, and immigration compliance are often siloed, leaving gaps that businesses may not even realise exist until a problem arises. For instance, digital nomad visas are often viewed as providing holders with wholly compliant right to work status, however employers may not realise that this is not always the case and contracts may not reflect the correct legal status or entitlements. Addressing informality requires a change in how we think about employment at a global level and recognising that flexibility and compliance are not mutually exclusive. Businesses need models that allow them to access global talent quickly while ensuring workers are properly employed and protected under local law. As attention remains fixed on unemployment figures, informality continues to expand beneath the surface. It is this hidden cohort of workers, contributing economically without security or rights, that represents the real crisis in the global labour market. Solving it will require coordinated action from policymakers and businesses alike, and a commitment to building workforce models that are not only innovative, but sustainable and fair.
Neupulse raises £3 million for delivery of neurotherapeutic technology

What if businesses need help in applying?

Many businesses will be able to go through this process alone, but many others may not, especially given the fact that staff are working from home and many businesses may be looking to access these loans as a matter of some urgency.

One source of assistance might be your accountant, and another might be certain business groups or federations. But as I seem to have said many times over the last few weeks, businesses need to adapt and be agile, and look for different ways of doing things, and indeed be able to react rapidly to ever changing events and there are other sources of assistance available also.

We at BOOM & Partners understand SMEs and their needs, and how to help them grow and prosper. We also have the benefit of understanding the banks very well, and the financial and legal aspects of CBILS, so if there are readers that we can assist in any way then I would be very happy to see if we can help to simplify and speed up your applications. We would of course also be happy to help in any other way that we can.

Startups Magazine

Startups Magazine. All rights reserved. c 2026. Company number is: 06755141

Scroll To Top