Bond and Coronavirus Business Interruption Loan Scheme: Difference between pages

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1. ''Securities - debt''.
''Business continuity - pandemic - UK.''


In the context of securities, a bond is a formal longer-term debt investment, usually tradeable, issued by a borrowing organisation and bought by a lender (= debt investor).
(CBILS).


The CBILS will be provided by the UK government owned British Business Bank through participating providers.


The bond is usually administered by a trustee.  
It will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.


Bonds typically require the issuer to repay the amount borrowed plus interest over a designated period of time.  
The CBILS provides the lender with a UK government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.  


The current market yield on the bond is both (1) the market rate of return to the debt investor and (2) the pre-tax market cost to the issuer of debt capital.
The UK government will also cover the first 12 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital.  


Issuers of bonds include a wide range of corporate and public sector entities, including central governments.
The maximum value of a facility provided under the scheme will be £5 million.




2. ''Trade finance - credit support''.
CBILS SUPPORTS A WIDE RANGE OF BUSINESS FINANCE PRODUCTS, INCLUDING:


In trade finance, a bond is an instrument issued by a bank or an insurance company, in favour of a buyer, on behalf of a supplier, as additional assurance to the buyer that the supplier will perform its obligations under the supply contract. 
*Term facilities
*Overdrafts
*Invoice finance facilities
*Asset finance facilities


Such a bank bond or insurance company bond will be supported by an indemnity issued by the supplier in favour of the bank or insurance company.


TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST:


Examples include advance payment bonds, bid bonds, customs bonds, performance bonds and retention bonds.
*Be UK based, with annual turnover of no more than £45 million.
*Operate within an eligible industrial sector.
*Be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term.


In this context, the terms "bond" and "guarantee" are often used interchangeably.


==See also==
*[[British Business Bank]]
*[[Business continuity plan]]
*[[Contingency plan]]
*[[COPD]]
*[[Coronavirus]]
*[[Coronavirus Job Retention Scheme]]
*[[COVID-19]]
*[[COVID-19 Corporate Financing Facility]]
*[[Disaster recovery planning]]
*[[Financial stability]]
*[[Liquidity management]]
*[[WFH]]


3. ''Risk management - guarantee.''


A guarantee provided by one party to another.
==Resources for COVID-19==
[https://www.treasurers.org/hub/technical/covid19 ACT technical - COVID-19]


[https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses UK government: support for businesses]


4. ''Risk management - collateral.''
[https://www.gov.uk/coronavirus UK government: COVID-19 support hub]
 
An amount of money provided as security for a guarantee.
 
 
== See also ==
* [[Advance payment bond]]
* [[Agent bank]]
* [[An introduction to debt securities]]
* [[Bearer bond ]]
*[[Bid bond]]  = tender bond
* [[Bond basis]]
* [[Bond equivalent yield]]
* [[Bond futures]]
* [[Bond indenture]]
* [[Bond issue]]
* [[Bond mandate]]
* [[Bond vigilante]]
* [[Bonding]]
* [[Bonding line]]
* [[Bulldog bond]]
* [[Callable bond]]
* [[Catastrophe bond]]
* [[Clean price]]
* [[Climate bond]]
* [[Collateralised Mortgage Obligation]]
* [[Convertible bonds]]
* [[Corporate bond]]
* [[Cost of debt]]
* [[Counter-indemnity]]
* [[Coupon]]
* [[Coupon bond]]
* [[Covered bond]]
* [[Credit rating]]
* [[Credit rating agency]]
* [[Credit support]]
* [[Customs bond]]
* [[Debenture]]
* [[Depositary]]
* [[Dim sum bond]]
* [[Documentation]]
* [[Domestic bond]]
* [[Dirty price]]
* [[Drop-lock bond]]
* [[Dual currency bond]]
* [[ESG bond]]
* [[Eurobond]]
* [[Exchangeable bond]]
* [[Floating rate note]]
* [[Foreign bond]]
* [[Gilts]]
* [[Global bond]]
* [[Government paper]]
* [[Green bond]]
* [[Guarantee]]
* [[High-yield bond]]
* [[Indemnity]]
* [[Indenture]]
* [[Index linked bond]]
* [[Interest determination date]]
* [[Internal rate of return]]
* [[International bond]]
* [[Investment-grade bond]]
* [[Irredeemable bond]]
* [[Jumbo]]
* [[Junk bond]]
* [[Loan]]
* [[Longer term]]
* [[My word is my bond]]
* [[Obligation]]
* [[On-demand bond]]
* [[Panda bond]]
* [[Paper]]
* [[Par bond]]
* [[Par yield]]
* [[Paying agent]]
* [[Performance bond]]
* [[Perpetual bond]]
* [[Principal]]
* [[Private bond]]
* [[Redeemable bond]]
* [[Retail bond]]
* [[Retained bonds]]
* [[Retention bond]]
* [[Samurai bond]]
* [[Secured]]
* [[Securitisation ]]
* [[Securitise]]
* [[Security]]
* [[Shallow discount bond]]
* [[Share]]
* [[Short term]]
* [[Social bond]]
* [[Social impact bond]]
* [[Social inclusion bond]]
* [[Standby letter of credit]]
* [[Straight bond]]
* [[Stock]]
* [[Stock exchange]]
* [[Sukuk]]
* [[Supranational bond]]
* [[Surety bond]]
* [[Sustainability bond]]
* [[Trustee]]
* [[Use of proceeds bond]]
* [[Yankee bond]]
* [[Yield]]
* [[Yield to maturity]]
* [[Zero coupon bond]]


[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Long_term_funding]]
[[Category:Compliance_and_audit]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Treasury_operations_infrastructure]]

Revision as of 10:44, 23 March 2020

Business continuity - pandemic - UK.

(CBILS).

The CBILS will be provided by the UK government owned British Business Bank through participating providers.

It will offer more attractive terms for both businesses applying for new facilities and lenders, with the aim of supporting the continued provision of finance to UK businesses during the Covid-19 outbreak.

The CBILS provides the lender with a UK government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.

The UK government will also cover the first 12 months of interest payments, so businesses will benefit from lower initial repayments. The business remains liable for repayments of the capital.

The maximum value of a facility provided under the scheme will be £5 million.


CBILS SUPPORTS A WIDE RANGE OF BUSINESS FINANCE PRODUCTS, INCLUDING:

  • Term facilities
  • Overdrafts
  • Invoice finance facilities
  • Asset finance facilities


TO BE ELIGIBLE FOR SUPPORT VIA CBILS, THE SMALL BUSINESS MUST:

  • Be UK based, with annual turnover of no more than £45 million.
  • Operate within an eligible industrial sector.
  • Be unable to meet a lender’s normal lending requirements for a fully commercial loan or other facility, but would be considered viable in the longer-term.


See also


Resources for COVID-19

ACT technical - COVID-19

UK government: support for businesses

UK government: COVID-19 support hub

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