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How CBILs work
The CBIL Scheme offered businesses a 12-month capital repayment holiday and for the first year of the loan the interest payments were amde by the UK Government.Â
In addition, companies had the ability to repay the loan over six years, increasingup to ten years if agreed by the lender.
Unlike Bounce-Back Loans which were 100% guaranteed the government guaranteed only 80% of a CBIL with the remaining 20% issued at the banks own risk. However, many lenders requested security over business assets and a personal guarantee for any CBIL over £250,000.Â
What if my company can’t pay its CBIL?
If your company is unable to maintain repayments and interest charges but you believe your company is still viable and will eventually be able to repay the loan you should discuss this with the lender to see ifyou can negotiate alternative repayment terms. They may be willing to extend the repayment period or offer other alternative solutions.
Another option may be to seek other sources of funding to repay the CBIL, such as asset refinancing or investment.
When confronted with repayment difficulties and struggling cashflow issues you should seek advice from a licensed insolvency practitioner who can analyse the company’s financial position and explore the available solutions with you. Â
Taking a proactive approach may give you a wider range of options and ceasing to trade isn’t necessarily always required.
Director
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Is liquidation the right option for you?
Check the health of your business with our free business health check tool.  Get an indication as to whether your company has what it needs to survive.  Includes:
- Company health assessment
- Types of liquidation available
- Options & next steps
*All informaton provided is completely confidential and will not be shared with a third party
How can my company write off a CBIL?
A CBIL can’t be written off. However you may be able to renegotiate payment termss with the lender. If your company becomes insolvent and subsequently enters an insolvency process the CBIL lender will have a claim as a secured or unsecured creditor.
Can I dissolve a company with a CBIL?
Directors considering voluntarily dissolving an insolvent business should be aware of the potential consequences. The Insolvency Service is
able to investigate the conduct of directors even if the company has not entered into a formal insolvency process and if the directors are found
to have acted improperly they may face prosecution and disqualification from acting as a director.  It’s crucial for directors to fully grasp the potential legal implications and seek professional advice if they are unsure of the best course of action.
What happens to a CBIL in a CVA?
A CVA provides a company with an opportunity to carry on trading and effectively parks all existing debts prior to the CVA’s approval. This can include a CBIL which is classed as an unsecured loan in the CVA unless security was provided at the time of the loan being taken out.
What happens to a CBIL if I go into administration?
The CBIL will be a secured debt in the administration unless security was granted otherwise it will be an unsecured debt.
What happens to a CBIL during liquidation?
If your company is placed into liquidation and the CBIL taken out was under £250,000 and no wrongful conduct has been identified the loan
essentially dies with the company without any personal financial impact on the directors.
If the CBIL was for more than £250,000 and a personal guarantee was provided the lender will be able to pursue you personally for the entire
balance, but before taking enforcement action against you the lender will generally first seek to recover what they can from the company’s
assets.  If during the liquidator’s investigation they identify any wrong doing you may be held personally liable for the company’s debts, including the CBIL although this will depend on the specifics of any wrong doing.
BUSINESS RESCUE & INSOLVENCY SPECIALISTS
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Do I have a personal liability for a CBIL?
A director could become personally liable for a CBIL over £250,000 where a personal guarantee has been provided. However, some protection was provided for directors by the government in relation to any personal guarantees provided, including:
- For loans over £250,000 it was not possible for the lender to take a charge over the director’s main home.
- It is widely believed that a CBIL lender can only recover up to 20% of any unpaid loan from a personal guarantee because the Government has guaranteed the other 80%. That is wrong! The CBIL lender must and will seek to recover all of its loan from any available company assets and any personal guarantee before it can claim 80% of any balance from the Government. There really is no such thing as a free lunch …
What happens to a CBIL in cases of director misconduct?
When a company is placed into administration or liquidation the insolvency practitioner has a statutory duty to investigate the conduct of the directors’ and the affairs of the company, for example reviewing how funds from a CBIL were utilised, whether the funds were used for the economic benefit of the business and generally whether the directors breached their duties.
If it is found that a director was responsible for using funds from the CBIL for personal gain or for ways in which the loan was not intended then it may leave a director open to personal liability. If this is the case a director could be pursued personally and recoveries made against the personal assets.  In addition a director may be subject to further investigation by the Insolvency Service and may face sanctions such as fines and directors’ disqualification if misconduct is found.
Book a free 1-2-1 consultation and get vital advice
If your company is struggling with unmanageable debts, decreased cash flow or concerns about
CIBL repayments, potential misuse or insolvency fraud contact our specialist team.Â
We can assess your situation and provide you with specific tailored solutions and next steps.Â
During your free initial advice meeting we will discover a true picture of your company’s financial situation
and offer practical and expert guidance on your next steps.
Initial meetings can be held at our office or your premises and are completely confidential.
There is no charge for this meeting – we only begin to charge if and when the terms of engagement have been agreed.
How Can We Help You?
If you are experiencing financial difficulty and need some advice, reach out to our specialist team for free and confidential advice. Here’s how MWW can help you:
- Free and Confidential Consultation – Get immediate support.
- We offer a no-obligation initial meeting with a senior member of our team. Call 08003317417 to schedule yours.
- Expert Assessment: Let our experienced professionals assess your CIBL arrangements and explore viable payment options moving forward.
- The sooner you address financial difficulties, the better chance your company has of a successful turnaround.
Contact MWW today for a free and confidential consultation to navigate these challenging times with a member of our expert team.
Free advice line for distressed company directors > 08003317417
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