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Coronavirus Business Interruption Loan Scheme (CBILS) – is it working?

At the end of last week, the Government (HMG) and British Business Bank (BBB) made further changes to CBILS.

So where are we now?

Here are some key findings we have taken from the updates:

  • According to HMG figures, 983 loans have been approved out of 130,000 applications. This is only a 0.75% success rate.
  • Access to the scheme has been opened to smaller businesses who would have previously met the requirements for a commercial facility but would have not been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme. This is operational as of Monday 6th April 2020, as per the British Business Bank’s website.
  • As we know, lenders cannot take personal guarantees for facilities under £250K and can only take a 20%, limited guarantee for loans above £250K. However, following recent changes there is a note on the BBB’s website stating, ‘Please note that where there is sufficient security available, it is likely that the lender will take such security in support of a CBILS facility.’ It does not categorically confirm if this refers to both under £250K and over £250K loans. Security over any director’s personal property is not allowed.
  • Lenders are using their own money, not HMG’s. In the event of default, they can claim 80% of their loan back from HMG under the guarantee, as long as they can be seen to have followed HMG’s and BBB’s policy. Each claim will be meticulously audited before these guarantees are settled. This is why funders are taking their time assessing applications thoroughly. Failure to follow policy could result in the guarantee ultimately being rejected down the line.
  • Although not confirmed on the BBB’s website, certain CBILS lenders have confirmed that their overall portfolio of CBILS loans will only be guaranteed by HMG up to a limit of 60%.
  • Several CBILS accredited alternative lenders have declared they will no longer be taking CBILS applications.

All this does not bode well for SMEs who need access to cash now.

PMD Business Finance can provide various cash flow funding solutions that are much quicker to access. Call one of our business finance experts today to discuss your options on 0161 633 2548 or email Peter Dobson, Managing Director, for more advice on peter@pmdbusinessfinance.co.uk.

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