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Are you considering a CBILS application?

Covid 19 maco3The Government has announced a raft of measures to assist businesses who require funding support through a variety of initiatives. The main one being the Coronavirus Business Interruption Loan Scheme (CBILS). 

The CBIL scheme is one that will provide support to small to medium-sized enterprises (SMEs), across the UK, who are experiencing disruptions to their cashflow. 

On 20th April the Chancellor announced a two-part support package for ‘innovative firms’, which means mainly start-ups and other venture capital backed business that would be unable to raise CBLIS or CLBILS finance >read more

And on 27th April the Chancellor announced new bounce back loans for small businesses. This new 100% government backed loan scheme for small business will launch on 4 May. Small businesses will be able to borrow between £2,000 and £50,000 to help protect them from the impact of the pandemic and the lockdown measures.

The UK Government will provide the accredited lenders with a 100% guarantee for the loan and the Government will also pay any fees and interest for the first 12 months. There will be no repayments due during the first 12 months.The scheme will open for applications on Monday 4 May. >read more


The key features and eligibility criteria of the CBILS scheme are briefly summarised below:

1) Established for businesses with a turnover of up to £45 million: this scheme allows businesses from all sectors to apply for the full amount if they are based in the UK with an annual turnover that doesn’t exceed the specified amount, and have a borrowing proposal that appears to be viable.

2) Between £1,000 and £5 million facility: This lending scheme is via the British Business Bank and covers a wide range of products, including term loans, overdrafts, asset finance and invoice finance. These are available on repayment terms of up to six years.

3) 80% government-backed guarantee: The scheme provides the lender with a government-backed guarantee against 80% of the outstanding facility balance. This is useful in terms of the potential to convert a decision from rejection of a loan to acceptance. However, it’s important to note that the borrowing business will remain 100% liable for the debt.

4) No guarantee fee for SMEs to access the scheme: The scheme doesn’t require SMEs to pay an access fee in contrast to the lenders who will be required to pay a fee.

5) Interest and fees paid by the Government for a year: The scheme allows for smaller businesses to benefit from no upfront costs and low initial repayments as the Government will make a Business Interruption Payment to cover the first year of interest and any lender fees. This will help to reduce the pressure on smaller businesses by giving them a year in which to recover and continue as before.

6) Finance terms: The scheme naturally offers different finance terms depending on the product required. For term loans and asset finance facilities, the finance terms are up to six years. Whereas, for overdrafts and invoice finance facilities, terms are up to three years.

7) Security: The lender can choose to use the scheme for unsecured lending for facilities of £250,000 and under. The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000. For facilities above £250,000, the lender must establish that the borrower is unable to provide security, before it uses CBILS. Primary residential property cannot be taken as security under the scheme.

Are you considering applying for a loan?19796 MACO FINANCIAL ACUITY NEWSLETTER WEB FILES 12

In order to make an application, you should be satisfied that there is a need. In the current economic environment this will be, for many, a simple decision. In making an application you should have a clear view on both the purpose and the quantum that is desired. 

You will be required to provide a current business plan and cashflow/financial projections for the business for the period ahead including the rationale and assumptions you will make about the downturn in trade you will experience. 

You should speak to us about what you information and plans will need to submit to your lender and what will be involved in the process. We can help you to get ready and prepared.

Loan application – tips and pointers 

The main challenge is working out when normal trading will return and thus how much funding will be needed to bridge the intervening gap. It is unlikely that trading will return overnight to previous levels once the ‘lockdown’ is over so you will need to ensure that you build in a ramp up period in your projections. But starting when?

You will need to be explicit on how COVID 19 is affecting your business e.g. reduced sales, delayed cash, reduced personnel through illness affecting productivity.
Ensure you complete the application form as comprehensively as possible and have, for example, up to date financials and a robust set of projections and assumptions to accompany the application as well as details of current financial commitments. That said, check with the individual lender what information is required as, for example, a business plan may be optional.

For loans below £250k, a personal guarantee should not be required but confirm this with the lender.

You may bank with a bank that is not on the lenders panel and therefore have to start afresh in looking for a lender. If one lender turns you down, you can still approach other lenders within the scheme.

Access to the scheme has now been opened up to smaller businesses facing cashflow difficulties who previously would not have been eligible for CBILS because they met the requirements for a standard commercial facility. However, the Government has not put any restrictions on the interest rates that the 40 banks involved in the scheme can charge 19942 MACO Tax Planning 43for the loans.

We can provide guidance and application support, as well as introducing clients to the scheme lenders and alternative finance providers. 

Get in touch with Euan Ferries, Corporate Advisory to discuss the application process and what you will need to prepare for your lender. Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Support package for innovative firms

On 20th April the Chancellor announced a two-part support package for ‘innovative firms’, which means mainly start-ups and other venture capital backed business that would be unable to raise CBLIS or CLBILS finance.

The Future Fund will launch in May and be delivered with the British Business Bank. The fund will provide loans between £125,000 and £5 million, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.

To be eligible, a business must be an unlisted, UK registered and UK based company that has previously raised at least £250,000 in equity investment from third party investors in the last five years.To begin with the government is committing £250 million to the scheme.

It will initially be open until the end of September, with its scale kept under review >read more: British Business Bank

Other sources of funding and Coronavirus Support available to Scottish Businesses >read more

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