Packaging applications for the Government's Coronavirus Business Interruption Loan Scheme (CBILS)
Our business finance experts can help you apply for a CBILS loan. We will:
- Check your eligibility
- Help you get your application together properly, so it meets lender requirements
- Package your application (to your own bank or the CBILS providers on our panel)
- Track the progress of your application through our app
Coronavirus Business Interruption Scheme (CBILS)
At Budget 2020, the Chancellor announced that a ‘Coronavirus Business Interruption Loan Scheme’ (CBILS) would temporarily replace the Enterprise Finance Guarantee (EFG).
It will operate in a similar way to EFG and provided by the British Business Bank but will offer more attractive terms for both businesses and lenders, to support the continued provision of finance to UK businesses during the Covid-19 outbreak.
- Overdraft facilities
- Invoice Finance
- Asset Finance
What is The Coronavirus Business Interruption Loan Scheme (CBILS)?
The British Business Bank’s CBILS facilitates business finance to smaller businesses that are eligible for funding, but unable to obtain finance due to having insufficient security to meet the lender’s standard requirements.
The borrower (you) always remains 100% liable for the debt. In this situation, CBILS provides the LENDER ONLY with a government-backed 80% guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’.
Is my business eligible for the CBILS?
To apply to a lender that’s backed by the CBILS' your business must:
- Be trading more than 2yrs
- Demonstrate maintainable turnover during the current crisis
- No adverse or CCJ’s
There are a some sectors not eligible for CBILS backed loans
- Freight and Transport
- Travel and Tourism
Status of Lending in the UK
Currently, this is a demand-side shock that impacts business cash flow as opposed to the capital market-driven, credit supply shock we previously saw in the crash of 2008.
Lenders across the UK are ensuring businesses have the funding they require to navigate through the current crisis. Affordability and security are critical, with many applications now under a higher level of scrutiny during the credit process. Sectors such as travel, retail and hospitality will be faced with more significant restrictions, but there are solutions if SMEs and their advisors are nimble.
CNG Energy works with 200 lenders and will update our customers on any changes made to our lenders' criteria to maximise acceptance rates.
|Lloyds Bank||£2bn SME lending arrangement with free fees|
|NatWest Bank||£5bn facilities. Payment holidays and other support|
|Market Finance & Fleximize||No longer lending to Travel / Tourism / Transport / Hospitality / Supply Chain / Aerospace|
Building resilience for UK Businesses
The need for business owners to preserve cash has risen significantly. However, this doesn't mean that demand shock has destroyed the business value. From Government support to relying upon your bank and alternative lending, there are a variety of solutions on the market.
The UK Government is offering support to small and medium enterprises across the UK, who have been affected by COVID-19. They are currently offering.
Cash grants up to £25,000
A grant is funding which doesn't usually require repayment, making it the cheapest money small businesses can receive. Its purpose is to help with rent and premises costs via Small Business Rate Relief (SBRR).
SBRR can be accessed via local authorities. We estimate this will most likely be provided as a refund or credit. Please note that the government announced this on 17th March 2020, which means the details of the scheme are still to be confirmed.
Pros & Cons
- Funding is paid directly from your local authority to your businesses with a rateable value between £15k and £51k
- Businesses could cancel payments for business rates (as the in future the grant may be a credit), to improve their cash position today
- Providing retail, hospitality and leisure businesses in England a 100% business rates holiday for the next 12 month
- Increasing grants to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000
- Providing further £25,000 grants to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value over £15,000 and below £51,000
- Grant funding, so no repayment or interested is anticipated (TBC)
- Might be a delay however could be used to repay existing credit taken out earlier assuming no early repayment fees
Quick funding solutions
Businesses will now be able to bring in additional cash to help build strength from a loss of revenue.
The British Business Bank's CBILS
CBILS facilitates commercial finance to viable small businesses, who are unable to obtain the funding they need due to insufficient security. The borrower will always be 100% liable for the debt.
Currently, there will be up to five months of interest-free loans available through CBILS, which may be attractive solutions of eligible businesses. However, the product is subject to affordability, so Think Business Loans recommends running any application for CBILS in comparison to another and being mindful of the potential drawdown timelines.
Pros & Cons
- 40 financial institutions can provide finance through the EFG
- The government guarantees 80% of the loan; this means lenders are more willing to lend
- Loans available up to £5m (increased from £1.2m on 17th March) subject to affordability
- The borrower is still responsible for repaying the loan
- Access to the loan can take between 4 to 12 weeks, so make sure you have all your available options in place, should the drawdown take longer than expected
Extending bank overdrafts
Arranging a Business Overdraft with your bank or specialist alternative provider can be a quick process.
Pros & Cons
- Usually available immediately from your bank, although it can take a few weeks
- Banks aim to support businesses by extending existing facilities such as overdrafts. Natwest has currently offered a £5billion fund, Lloyds a £2billion fund - which will be fee-free
- However, it can often be the first facility to be withdrawn by banks in the future
Small to medium businesses can also apply for a short-term facility. The facility works a bit like an overdraft but is usually separate to your bank account so that funds can be transferred between the accounts.
Pros & Cons
- You pay only for what you use
- These can be unsecured or secured and offer a true revolving facility. Rates from 4.9% APR (secured) & 1% per month (PG)
- However, you will be required to activate the account by drawing some funds, as the facility will expire if not initially utilised
- The time it takes to access this funding can take hours for unsecured applications, for secured applications, it may take weeks
Selective invoice finance
Selective Invoice Finance is a flexible and straightforward solution that allows businesses to raise the funds they need by releasing the cash in outstanding invoices, on an invoice-by-invoice basis. Think Business Loans has a range of Invoice Finance providers with a variety of products suitable for a short term cash or long-term facilities.
Pros & Cons
- Many businesses have unencumbered debtor books for which the many invoice finance products can release cashflow into the business
- It will free more cashflow than an overdraft
- There are over 700,000 businesses that would be eligible for invoice finance in the UK; only 44,000 currently use it
- For selective invoice financing, it can take 1-2 days to access the funds; whole book funding can take around a week to drawdown
Merchant cash advance
Merchant Cash Advance allows business owners to take out a fixed amount with flexible repayments that fit your cash flow. This type of funding is particularly suitable for the hospitality and leisure industry, who are unsure about when their cashflow will resume to normal.
Pros & Cons
- 80% approval rate for the hardest sector to fund – retail, leisure and hospitality
- 100 – 150% of monthly takings
- Approval takes 1-2 days, but drawdown can take 20-30 days, subject to card acquirer split
Alternative finance loans
The alternative lending market sprung up in the wake of the 2008 financial crisis and has responded quickly to market needs. Our panel contains a range of alternative lenders, who offer flexible finance solutions to suit your needs. If you would like more information about the lenders on our panel, please call our lending managers today on 0203 880 9880.
Pros & Cons
- Many products exist outside of banks which are more straightforward and therefore faster to access
- Many products are more competitive with flexible terms for entry and exit, making them excellent facilities for the short term
What our experts say
We believe the government have potentially confused the SME community with their statement that they will be ‘issuing £330bn in government-backed loans’. This design of this initiative is to stimulate and maintain lending, borrowing and investment only. It is not to protect the borrower in any way; purely to protect the lenders only!
Will I be eligible if I have to close my business for a few weeks or months?Your eligibility will depend on the funder, they will take hundreds of variables into account.
Does this mean I don’t have to pay back 80% of the loan?No. The scheme only protects the lender, in the instance you default. You will be 100% liable for the debt.
Does this make me more likely to obtain finance?Yes! – That’s what it means. The scheme incentivises the lender to take more of a chance. However, you still need to demonstrate a viable business.
Are credit ratings and affordability still considered?Absolutely. The process of underwriting and obtaining finance is exactly the same as its always been.
What happens if I default on my loan?Lenders will ask for a Personal Guarantee, which means if your business goes into administration, they can pursue any personal assets.
The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and Industrial Strategy (BEIS). Full details on CBILS and the list of participating CBILS Lenders can be found on the British Business Bank website at: https://www.british-business-bank.co.uk/CBILS.
What now? - Speak to an expert!
We are more dedicated than ever to help businesses navigate these tumultuous times and access the funding they need when they need it most – we’ve got your back!
We have robust contingency and business continuity plans, and as a tech business we are no strangers to remote working. Our agents are always available, when you need them – give us a call on 0203 880 9880 or email firstname.lastname@example.org.
You are also able to view your credit score and available options 24/7 via our android and iOS App as well as the online client platform; https://customer.thinkbusinessloans.com.
We want to assure you that looking out for British Business is what we do best, and we are working with our lenders to ensure we don’t miss a beat - we won't let you down!