• COVID-19
    AFP Is Fully Operational And Committed To Supporting The Farming Industry

  • Learn MoreMore
    MENU
    contact us

    FAQs

    AFP

    CBILS Loan Eligibility

    AFP CBILS Loans
    Who is AFP?

    AFP is a specialist lender to the agricultural, horticultural and renewables sectors. It has a strong financial base, a deep understanding of the industries it serves, and its experienced team provides a bespoke service to its clients.

    It aims to provide and develop a relationship with its clients, through a committed and knowledgeable team, which understands their business and is able to provide ongoing support and advice.

    What does AFP do?

    AFP provides finance to help businesses develop and grow. It is an experienced  lender in the agricultural sector, with strong financial backing.

    Its key strength is supporting the long-term growth of businesses.

    Who does AFP lend to?

    AFP support a wide range of clients from those wishing to grow their farming and horticultural enterprises to the funding of renewable schemes.

    Does AFP help fund farm diversification schemes?

    Yes. AFP supports agricultural diversification projects.

    What does AFP do in the renewable sector?

    AFP specialises in the refinancing of renewable projects and the funding of further expansion, particularly in the AD sector where it has considerable experience.

    Can I consolidate my borrowings through AFP?

    AFP is open to discussing all the financial requirements of those seeking finance and is able to help and advise on the best way to restructure or consolidate borrowings.

    Which SMEs are eligible for CBILS?

    Find out if you're eligible
    Can companies that have received support from the Enterprise Investment Scheme (EIS) apply for CBILS?

    Companies that have received funding through EIS are in principle eligible for support from CBILS, provided that they satisfy the other criteria.

    If a company with UK employees exports over 80% of its services, does this class as a UK business activity?

    Yes, it does. This would be a UK trading activity even if the company’s income comes wholly or mainly from exporting.

    Are exporters eligible?

    Export businesses are in principle eligible and welcome into the scheme.

    Is an SME based overseas eligible?

    An SME which is foreign-owned is in principle eligible to apply for CBILS, provided it is trading in the UK (not just selling into the UK and has the core of its business operations in the UK) and uses the CBILS facility to support its business activity in the UK. The same is true for an SME which has UK ownership but is registered abroad.

    Useful Definitions

    CBILS Definitions
    What kinds of businesses are eligible for the CBIL Scheme?

    Businesses with a turnover of £45 million or less are eligible under CBILS. An SME can also be a sole trader or a partnership, as well as a limited company, under the CBILS definition.

    What is “turnover“ for the purpose of checking eligibility for CBILS?

    If it is a sole enterprise it is the turnover of the applicant only, as shown in the latest set of accounts. For applicants acting as part of a group, that have partners or linked enterprises, the turnover assessment should take the latest turnover of the applicant, as shown in their accounts, together with the turnover of any linked enterprises, any partners of any linked enterprises, any enterprises linked to any of the applicant’s partners and any enterprise linked to the applicant’s linked companies.

    Turnover & Income Generation

    Who Can Apply
    Does CBILS require that eligible companies generate a certain percentage of annual turnover from trading activities?

    An eligible SME must generate more than 50% of its income from trading – the sale of goods or services. CBILS is not designed to support shell companies. Registered charities and further education establishments are exempt from this requirement.

    Is a company that derives income from property eligible for CBILS?

    If it derives more than 50% of its income from commercial activity that generates turnover, whether or not this is with the intention of making a profit. This includes real-estate SMEs that derive income from property (including real-estate investment companies and housebuilders).

    Is a CBILS facility only available to existing AFP customers or can an SME that is not an existing customer still apply?

    CBILS is open to all eligible borrowers – your business does not need to be an existing customer of AFP.

    Businesses in Difficulty

    Understanding what is meant by a business in difficulty
    Which businesses meet the “business in difficulty” criteria?

    A “business in difficulty” is one that, as at 31 December 2019, had:

    • accumulated losses of more than half of its subscribed share capital for limited companies, or for unlimited liability companies its capital; or
    • started, or had fulfilled the criteria to be put into, collective insolvency proceedings; or
    • previously received rescue aid that was yet to be reimbursed (or, in the case of a guarantee, terminated); or
    • received restructuring aid, and was still under a restructuring plan; or
    • (where it does not meet the SME criteria) has fallen below solvency ratios for the previous two years.
    What does the accumulated losses criteria for a “business in difficulty” mean?

    The CBILS definition of a “business in difficulty” includes businesses that have accumulated losses that are greater than half of their subscribed share capital, as at 31 December 2019.

    For a limited liability company, this means having accumulated losses greater than half of its capital, if deducting accumulated losses from the company’s reserves leads to a negative amount that exceeds half of the company’s subscribed share capital.

    These criteria do not apply to SMEs that, on 31 December 2019, had existed for less than three years. That means that certain fast-growth businesses may not be eligible for the scheme (unless they are less than three years old).

    What are “collective insolvency proceedings”?

    These are as defined by the Commission Regulation (EU) 2015/848 of 20 May 2015, rather than the definition of “insolvency proceedings” in the Insolvency Act 1986. This means:

    • winding-up by, or subject to the supervision of, a court
    • creditors’ voluntary winding-up (with confirmation by the court)
    • administration
    • voluntary arrangements under insolvency legislation
    • bankruptcy or sequestration

    The “voluntary arrangements” above include company and individual voluntary arrangements.

    Receiverships, members’ voluntary liquidations and schemes of arrangement (under Part 26 of the Companies Act 2006) are not included.

    What does “fulfils the criteria under its domestic law” mean in collective insolvency proceedings?

    There is no official guidance from the European Commission on what this means. However, if a borrower is the subject of any of the proceedings listed above, or is not subject to any insolvency proceedings, but meets the criteria above, the borrower should be categorised as a “business in difficulty”.

    What defines rescue aid or restructuring aid?

    Rescue or restructuring aid is normally the subject of a specific state aid approval from the European Commission. For the avoidance of doubt, aid provided under the Enterprise Finance Guarantee Scheme is not rescue or restructuring aid.

    What criteria must a company that is not an SME (because it has 250 or more employees) meet to not be considered as “in difficulty”?

    For the two years prior to 31 December 2019, the book debt to equity ratio was greater than 7,5; and its EBITDA interest coverage ratio was below 1.0. A business must meet both to be classed as “in difficulty”.

    SMEs are not required to meet these solvency ratios.

    Which companies can be classed as SMEs for the “business in difficulty” definition?

    This can include self-employed people; family businesses; and partnerships or associations regularly engaged in an economic activity. It also includes any micro, small or medium-sized business that employs fewer than 250 people and has an annual turnover of no more than £45 million.

    Should the tests for a “business in difficulty” be on an individual or group basis?

    On a group basis.

    Are there any exceptions to the accumulated losses test?

    The accumulated losses test does not apply if the business is an SME that, on 31 December 2019, had existed for less than three years; or is a trust or unincorporated association.

    Can the CBIL Scheme be used to refinance an existing commercial facility?

    You can, in certain circumstances, use a CBIL Facility to refinance existing debt. For example, where you are seeking to put your business on a more stable financial footing and/or improve your working capital position, then, in principle, a CBIL Facility could be provided. However, you will need to go through the Application Process in relation to a CBIL Facility and, to be eligible, you will need to fulfil the Eligibility Criteria.

    Refinancing can be undertaken with or without an increase in the original borrowing. Any refinancing will be treated as a new facility and will be eligible for a CBIL Facility only where all Eligibility Criteria are fulfilled.

    When using a CBIL facility to re-finance an existing commercial facility with the same lender, the lender will be subject to certain limits. If the existing debt is help with another lender to the one you are seeking to obtain a CBIL facility to refinance that debt, these lender limits no longer apply.

    What is the Coronavirus Business Interruption Loan Scheme (CBILS)?

    CBILS is a new scheme that can provide facilities of up to £5 million for smaller businesses across the UK that are experiencing lost or deferred revenues, leading to disruptions to their cash flow. CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance facilities.

    Note: This scheme is just one of a number of measures announced by Government. You can find full details of the temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by coronavirus here.

    When can I access the scheme?

    Now, the scheme went live on Monday 23 March and will initially run for six months.

    What are the key features of CBILS?

    CBILS guarantees facilities up to a maximum of £5 million, available on repayment terms up to six years (for term loans and asset finance) and up to three years (for overdrafts and invoice finance facilities).

    The scheme provides the lender with a government-backed guarantee against the outstanding balance of the facility.

    There is no guarantee fee for SMEs to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees. You (the SME) will therefore benefit from no upfront costs and lower initial repayments.

    Under the scheme, AFP will not take personal guarantees of any form for facilities below £250,000.

    For facilities above £250,000, personal guarantees may still be required, at AFP’s discretion, but:

    • they exclude the Principal Private Residence (PPR); and
    • recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

    For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where AFP considers there to be sufficient security, making more smaller businesses eligible to receive the Business Interruption Payment. Where there is sufficient security available, it is likely that AFP will take such security in support of a CBILS facility.

    A borrower’s/guarantor’s Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL-backed facility.

    Note: It’s important that you are aware that you, the borrower, will always remain 100% liable for the debt. The CBILS guarantee is to the lender, not you as the SME.

    How do I know if I’m eligible to apply?

    Smaller businesses (SMEs) from all sectors can apply for the full amount of the facility, up to a maximum of £5 million.

    To be eligible for a facility under CBILS, your business must:

    • be UK-based in its business activity
    • have an annual turnover of no more than £45 million
    • have a borrowing proposal which AFP considers viable, were it not for the current pandemic
    • self-certify that it has been adversely impacted by the coronavirus (COVID-19).

     

    What is the definition of an SME for CBILS?

    Under CBILS, the definition of SME is confined to the turnover of an Applicant (or an Applicant’s group), which must not exceed £45 million. The Borrower cannot be an individual other than where the individual is a sole trader or a partner in a partnership and is acting in a business capacity.

    What supporting documents will I need to apply?

    You will need to provide certain documents when you apply for a CBILS-backed facility. These include:

    • Management accounts
    • Business plan
    • Historic accounts
    • Details of business assets

    If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business.

    What interest rate will I pay after the initial 12 month period?

    Interest rates after 12 months will vary and will depend on the specific lending proposal.

    What types of finance are available?

    AFP supports a wide range of CBILS facilities, including:

    • term loans
    • asset finance
    • revolving credit facilities
    What types of businesses is CBILS for?

    CBILS is designed to support a wide-range of smaller businesses (i.e. with an annual turnover of less than £45 million) across the UK who are impacted by the Coronavirus crisis.

    Will I need security to get a CBILS-backed loan?

    As required by the scheme, AFP will not take personal guarantees of any form for facilities below £250,000.

    For facilities above £250,000, personal guarantees may still be required, at AFP’s discretion, but:

    • they exclude the Principal Private Residence (PPR); and
    • recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

    A borrower’s/guarantor’s Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL-backed facility.

    Do I need to provide evidence that I have a viable business?

    Yes. You must show in your borrowing proposal that were it not for the current pandemic, your business would be considered as viable.

    You must also self-certify that your business has been adversely impacted by the coronavirus outbreak.

    How long will CBILS run for?

    CBILS is initially running for six months from 23 March 2020.

    Are sole traders/freelancers eligible?

    Yes, as long as their business activity is operated through a business account. CBILS is open to:

    • sole traders
    • freelancers
    • bodies corporate
    • limited partnerships
    • limited liability partnerships, and
    • any other legal entity carrying out business activity in the UK with:
      • an annual turnover up to £45 million, and
      • business activity operating through a business account operating in any sector

    The business must generate more than 50% of its turnover from trading activity.

    I am getting other kinds of aid to help respond to the coronavirus. Can I still get a loan?

    Yes. You will still be eligible for a loan but certain payments you receive may count towards the amount of Business Interruption Payment (BIP) – the payments the UK Government will make to cover interest and fees on your loan – you will be entitled to.

    Find out More

    Find out more & enquire today
    angle-downphone-handsetcrossmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram