Coronavirus Government backed loans will not be around forever, and with an expiry date of 30th September 2020, now is the time for companies to assess what finance they need to put in place to trade safely whilst the world’s economy remains in an uncertain state. PMD is working every day to support SMEs across the UK to secure finance options for their businesses and it is important for us to stress that companies need to act now before it is too late.
There are 5.9 million SMEs in the UK and with only 54,500 SMEs having been offered the Coronavirus Business Interruption Loan Scheme (CBILS) so far, we are conscious that there may be many businesses that have yet to maximise on the current opportunity. Last week, the NACFB released the following statistics:
- 1,067,340 facilities offered worth £45bn
- Bounce Back Loans (BBLS) count for 1,050,000 of the total
- Which equates to 98.4% of all facilities
- Worth £31.7 billion
- Totalling 70% of money lent
- 54,500 of loans offered on CBILS worth £11 billion
- £2.7 billion loaned to larger entities through CLBILS
It is surprising to read that 70% of money lent is through BBLS, when the maximum loan is only £50K. This amount may not be enough for all businesses that have received a BBLS loan and if they require more than the £50K limit, they will need CBILS to top up their finances.
If a company has previously secured a BBLS loan but is finding themselves in need of more working capital, we are here to offer support and answers but businesses must not forget that their BBLS loan must be repaid by using part of the CBILS loan if they choose to go down this route. Businesses are forbidden to have a BBLS and CBILS at the same time. Therefore, they need to apply for an extra £50,000 on top of the new CBILS facility to repay the BBLS.
The statistics also clearly show how difficult it has been for companies to access CBILS loans through banks.
Declined or frustrated by your bank?
Even if a business has been declined CBILS by their bank, there are still options out there. There are many flexible alternative finance solutions available, which are much easier and quicker to access than bank facilities.
As a reminder, CBILS can be used for growth, working capital, asset re-finance and new asset investments. CBILS can also be used in combination with invoice finance as a top up loan to boost cash flow, and with re-finance to lower existing re-payments and release cash tied up in existing assets.
We are experiencing high numbers of success rates with CBILS through the alternative finance market place. Andy Taylor, Sales Director of Haydock Finance, comments:
“Our underwriters could be working until midnight on 30th September 2020, but once that deadline has passed, CBILS applications on the current scheme can no longer be considered.”
The door will not always be open
The Government backed loans will not last forever so whilst we work towards a closing date of 30th September, businesses must assess their finances and take the opportunity that is right in front of them to ensure consistent cash flow and to continue to survive and thrive during these uncertain times.
Our biggest piece of advice is to act now – take this opportunity and beat the rush to eliminate any future financial uncertainty.
If you are looking for advice for your or your client’s business, then get in touch with one of our experts by calling 0161 633 2548 or by emailing: email@example.com.
The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and Industrial Strategy (BEIS). British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). Full details on CBILS and the list of participating CBILS lenders can be found on the British Business Bank website at: www.british-business-bank.co.uk/CBILS