When the government announced the availability of the Coronavirus Business Interruption Loans (CBIL), the business community breathed a sigh of relief as it appeared that banks may be more willing to grant loans to struggling businesses, to help them through these unprecedented times.

However, it has quickly become clear that whilst the government are prepared to back 80% of the loan, the remaining 20% is causing the banks some concern.  

One of the key features of the CBIL is the issue of security.  The lender must establish that the business had an absence of available security in order to be granted a CBIL.  

However, this leaves the bank with a loan, 20% of which is unsecured and not guaranteed by the government.  It is becoming apparent that  banks are looking to fill this void by requiring directors of businesses to offer a personal guarantee for the loan.

Undoubtedly, in circumstances where businesses are already struggling (hence the need for the loan in the first place) it will be only the most confident of directors who offers to personally guarantee any part of a business loan - and, frankly, there are very few businesses who are feeling confident in this current climate.