CBILS - the latest

More welcome updates about the Coronavirus Business Interruption Loans Scheme (CBILS) came out from the Government on Friday (3 April 2020).

The most important ones for smaller businesses are that:

  1. The banks should not seek personal guarantees from directors for loans of <£250,000
  2. The banks no longer have to offer a loan on standard banking terms first if they would be willing to do so.

Most of the banks, under public pressure, had already come forward and said that personal guarantees wouldn't be a condition of loans under £250,000. Confusion still reigned, however, about whether the banks should follow the rules of the Enterprise Finance Guarantee (EFG) scheme, upon which the CBILS is based, and only seek a government guarantee when they couldn't lend on normal banking terms. This was leading to many good quality applicants being offered loans with arrangement fees, higher rates of interest and extensive security requirements.

Elsewhere in the scheme, CBILS has now been opened up to larger businesses with turnover of up to £500m and loans of up to £25m. Previously the limits where turnover of £45m and a maximum loan size of £5m.

CBILS was developed really quickly and it's not surprising that some revisions have been needed. Nevertheless, it is pleasing to note that the Government is listening to the concerns of the small business community, which has been well represented by its various trade bodies.

Change might not be enough

Notwithstanding the changes, there was still a lot of commentary and case studies in the weekend's press about small businesses struggling to access the scheme, with calls not being returned by lenders and decisions not coming forward quickly enough. Our contacts in the banks tell us that they are overwhelmed with the demand for CBILS loans and it will inevitably take them time to get on top of things.

This will be of little reassurance if you are desperately in need of cash now or before the end of the month.

Please talk to us if this is your situation. We have contacts with all of the major lenders and, more importantly, we can make sure that your application will be in the best possible condition to be accepted when it is reviewed. The last thing you need when your application reaches the top of the pile is for it to be rejected for incomplete information or because you haven't made your business case well enough.

We can also help you look at other short-term funding and cash flow management solutions if CBILS is likely to take too long or is not the right solution at all.

CBILS - the latest

By: Neil Edwards

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