Coronavirus Business Interruption Loan Scheme (CBILS)

SMEs have a better chance of getting hold of emergency funding after the UK Government updated its Coronavirus Business Interruption Loan Scheme (CBILS). When it initially launched on 23rd March 2020, the scheme wasn’t available to businesses that could already access commercial loans.

Now it’s been opened up to all smaller businesses with a turnover of less than £45m, so long as the borrowing request is considered “viable” by the lender. Businesses and organisations that remain excluded are insurers, state-funded schools and colleges, public sector bodies and banks.

While the borrower remains fully liable for the debt, you won’t be required to give personal guarantees for loans worth less than £250,000. For larger amounts, personal guarantees are at the discretion of the lender but are capped at 20% of the outstanding balance.

The clarification of CBILS in regard to personal guarantees was welcomed by Guy Bridge, CEO of business finance platform Finpoint. Says Bridge: “It means the scheme will work better for more of the hard-working business owners up and down the country.”

To apply for support under CBILS, you’ll need to contact one of the lenders accredited by the Government-owned British Business Bank, and your principal lender should be your first port of call. Before making contact, however, you should be aware that a CBILS application requires more detail than a standard business finance application.

“Your existing bank may be able to assist you, such as by providing revolving credit, an overdraft, relaxing your existing lending terms, or giving you a repayment holiday. But you will need to come prepared with key financial information about your business.”

Getting help from your bank usually takes time, but more so now because - not surprisingly - banks have been inundated with enquiries. If you’d like help in applying, it’s worth submitting a request for funding on Finpoint - which you can access via Credit Passport - for consideration by its panel of 136 lenders. They currently include half of those accredited by the British Business Bank, with more being added, as well as alternative lenders. Dedicated COVID-19 related support is available, along with other types of funding.

Finpoint takes your funding requirements and objectives as a starting point, only matching you with lenders that can meet your needs. By doing it this way round, rather than asking you to choose a particular product, Finpoint may highlight types of funding you hadn’t previously considered. Says Bridge: “Our job is to remove the guesswork. For example, you might be able to get asset finance by providing your invoices, even though you might not think of invoice finance as a solution that fits your needs.”

While many lenders say they’re currently open for business, the available funding options are fewer than they would be under normal circumstances. Says Bridge: “The vast majority of lenders have battened down the hatches so there is less flexibility. We have seen changes being applied to risk criteria and eligibility based on sectors like hospitality and retail. But on the other hand, some of our lenders have added new products to the platform to provide support alongside CBILS.”

''Businesses applying with a Credit Passport make it easier for lenders. With application volumes being much higher, the quality of the information submitted matters even more than usual.”

The information you provide to Finpoint goes into a data room, and you are in full control. Says Bridge: “We publish your data anonymously to lenders in the first instance. If they like the sound of the proposal, they can go ahead and request to connect with the borrower.”

The process is likely to take longer than normal in the current circumstances. “We only introduce you to lenders who are open for business, but every lender is taking longer to process applications, hence the importance of getting your application in sooner rather than later.”

So what should SMEs do to ensure the best possible chance of a successful loan application? Says Bridge: “We won’t introduce borrowers to our panel unless the application has basic financial information, such as last year’s accounts summary, management accounts, bank statements, and an explanation as to why they need the funding. Businesses applying with a Credit Passport make it easier for lenders. With application volumes being much higher, the quality of the information submitted matters even more than usual.”

Join Credit Passport for free in just two minutes, and access the Finpoint lending platform.