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Essential need to knows: Applying for a Coronavirus Business Interruption Loan (CBILS)

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READ TIME: 3 minutes

Coronavirus Business Interruption Loans are helping businesses across the UK manage the cash flow impacts of the pandemic. This article provides essential guidance when making a loan application.

CBILS or Bounce Back Loan?

The first consideration should be whether or not you wish to apply for a Bounce Back Loan or CBILS loan. The main (but not only difference) between the two is that Bounce Back Loans are awarded from £2,000 to £50,000.

CBILS on the other hand can provide finance from £50,001 to £5 million.

This article has been specifically written with CBILS in mind. 

Am I eligible?

SALES REVENUE – the scheme is open to businesses with a UK based turnover of up to £45 million a year. 50% of the revenue needs to be from trading activity.

Who decides on whether I can obtain CBILS finance? 

Lenders designated by the British Business Bank are taking applications for CBILS loans. Some businesses go direct to such lenders while others will make the application via an advisor such as an accountant (see link later in article for list of accredited lenders).

What do I need to provide to the lender when making an application?

Typical items required by lenders to assess CBILS applications are:

-       Cash Flow forecasts indicating the size of the cash shortfall as a result of the pandemic (and therefore the size of the financing requirement)

-       A recent set of management accounts

-       Previous accounts lodged with companies house

-       Other details such as steps the business has already taken to manage the cash position e.g. furloughing of staff, payment holidays with creditors (where possible)

Important: Any application made must be able to evidence that the business was commercially viable if it were not for the event of the pandemic. The CBILS scheme is specifically designed to fund the cash impacts of the pandemic only.

What type of finance can be accessed?  

Finance can be awarded via:

-       Term loans (repayment terms of up to 6 years)

-       Overdrafts

-       Invoice financing

-       Asset financing

It is at each lenders discretion as to what form the finance will be awarded in.

How much is available under CBILS?

Finance form £1,000 to £5million can be awarded (although for less that £50k a Bounce Back Loan may be considered – see comments in opening section).

What are the costs of making an application?

Loans made are interest free for the first 12 months (the Government are covering these costs).

No setup fees are to be charged.

Any interest payable (from year 2 onwards) will be agreed with/advised by the lender during the application process.

Who is liable for the debt?

The borrower remains 100% liable. The Government has agreed to 80% guarantee the debt where the borrower defaults.

I would like to make an application. How do I get started?

1.   Identify the type of finance required and those accredited lenders which can offer it. The British Business Bank offers a filter which can assist with this. To see this click this link.

2.   The tool enables you to select the region of your business and the type of finance you require. A list of suitable lenders is then provided.

3.   Look into what is being provided by each lender and decide how much your business needs to borrow.

4.   Prepare the information required to apply (this would typically include cashflow and profit and loss forecasts, a recent business plan and up to date detailed management accounts).

5.   Choose a lender and make your application. Processing varies from lender to lender.

Obtaining finance through a lender with which you have an existing relationship may help to speed up the process.

North Hill can assist with collating the information required to make an application.

Contact us to find out how we can help you with your CBILS application/for any advice on the facilities offered by a lender.