Joe Brewer Consulting Partner

The CBIL scheme is complex, was created at very short notice and has many traps for the unwary borrower. 

Key points include:
  • CBILS offerings differ substantially from lender to lender: it is worth carefully reviewing different offerings and ensuring you’re comparing apples with apples
  • All lenders will require borrowers to be responsible for repayment of 100% of the loan facility –  not just the 20% that is not guaranteed by the government and, where defaults occur, will follow their “standard commercial recovery processes” – CBILS is by no means a grant or “free money”
  • Borrowers will be asked for a lot of financial information and you should engage fully with your accountant as quickly as possible
  • A key point that many have missed is that loans via CBILS are limited to:
    • A maximum of 25% of 2019 turnover or
    • Twice the annual wage bill - whichever is greater.
  • Ensuring management income and cashflows for 2019 are accurate and reflect the strength of the business
  • Providing a clear explanation for any “one-offs” that reduced income or profitability in 2019
  • Ensuring the application clearly shows affordability “in a steady-state economy”
  • Loss-making companies are unlikely to be able to access the scheme given the above and lenders are also being extremely careful with seasonal businesses
  • We would strongly suggest that borrowers start with their current provider of business finance as all lenders from what we can see to date are prioritising current borrowers 
  • Borrowers should realise that CBILS funds are not the only option out there. In many cases, reviewing other finance alternatives would make economic sense and/or allow funds to be provided more quickly.
Information and strategy required:

Have all the basic information correct and complete – we can work with you to provide a list of information the bank will require.

In addition you will need to provide a report explaining the effect of coronavirus on your business and a clear explanation as to how you will mitigate the impact of coronavirus on your business –  remember the banks are looking to lend to companies that are viable - this is not a grant or free money from the government.

Also you will need a set of financial forecasts which estimate your total cash requirement over the next 12 months and the amount of debt you are seeking – we can use our financial modelling software to produce quality, well presented reports for the bank.

Borrowers who work closely with accountants and are able to provide this information to lenders will stand a much higher chance of receiving CBILS funding, we will be glad to provide you with this support at a time when you need it most.