CBILS – The New Normal?

CBILS – Let Us Help

Whilst businesses across the UK Economy gradually resume trading, and we all attempt to identify the new ‘normal’, opinions have become widely divided on so many Coronavirus-related topics.

There is one subject upon which (almost?) everyone is agreed: that the (ongoing) cost of the pandemic has been immense, it has not been fairly borne, and it will take many of us years to repay and recover from.

Chancellor Rishi Sunak acted quickly and decisively back in March when he announced his unprecedented package of financial support, promising no-one would be left behind. Four months later there are plenty of people involved in the live-events, leisure, and hospitality sectors who might beg to differ.

Similarly there are millions of director-shareholders of small companies up and down the country wondering why they have been marginalised and treated inferiorly to equivalent self-employed/freelance business-owners.

Clearly there are many SME owners trying to work out why HM Treasury thinks it can fool them into thinking grants and loans are the same thing.

Conversely, there are business owners who have enjoyed perfectly tolerable trading conditions, and so have drawn a Bounce-Back Loan from their bank and used it to buy a nice new car. As in life, there are winners and losers!

There will be time for recriminations later. For now, the priority for every business is to raise its turnover to whatever can now be considered optimum levels as soon as possible. Trade and, more importantly, cash are at a premium amidst the many Covid-compliant process changes every company is having to adopt.

If you believe everything you read in the news, you would think that access to emergency funding would be a straightforward process, but – like most things reported in the news – not everything is quite as it seems.

The Government-owned British Business Bank is the place to head for if you need emergency funding. Every week more companies are being added to its website so that there are now in excess of 100 lenders accredited to provide Coronavirus Business Interruption Loan Scheme (CBILS) and/or Bounce Back Loan Scheme (BBLS) funding facilities. BUT please do not assume that they are all offering the same boiler-plate solution – they are not.

If you have the time to investigate each of them, to evaluate their respective product offering and see if they meet your individual requirements, you will have come across at least one who’s website link takes you to a message that reads:

“…Unfortunately, whilst we are a supporter of the CBIL programme, we don’t have sufficient capital in order to participate in the scheme.  Currently, we suggest that your usual bank will be in a much stronger financial position to assist you with CBILS.”

Yes, really!

And we know of other lenders who, despite similar capital restrictions, are also being accredited by the BBB and added to the list.

Another accredited lender’s weblink takes you to a landing page offering loans at 43.1%APR; others are regionally restricted; and many more are only offering facilities to their existing customers.

It should be no surprise, then, that recent data from the British Business Bank reports application volumes have dramatically reduced, implying either confusion or negative publicity is deterring legitimate borrowers. At the same time the overall approval rate is barely 50%, suggesting applications may have been misdirected.

If your business needs funding at a critical time, you probably don’t have the time to make sense of over a hundred different propositions and filter out the ones that are appropriate for you. So don’t struggle unaccompanied through this maze of deals – come and speak to us.

Adamantean is an approved broker for many of the accredited CBILS lenders, and perfectly positioned to help you navigate your way to a successful conclusion.

Collectively the team at Adamantean has 100+ years of experience.  So, why not take advantage of that experience, and our familiarity with the variety of systems and processes. Over the last four months we have helped secure the right finance solution for many customers, but don’t just take our word for it…

What do our customers say?

“I approached Sam at Adamantean soon after the CBIL scheme was announced. Whilst in theory it seemed very simple to grasp, I knew only too well that anything involving banks making lending decisions is nothing of the sort and I would need help. 

Sam from Adamantean has looked after our asset finance requirements for a fair while now and so, armed with a good knowledge of our business, she went in search of the best solution for us. Sure, we received a few knock-backs but, with a lack of clarity from the government and confusion within the lenders, it was inevitable. But with every application we learnt more, finally resulting in not one but two approvals.
I can’t stress enough how incredible Sam has been in what was an utterly frustrating and stressful period and I will always be grateful. You learn the true value of people when you are really up against it, and I wouldn’t hesitate to recommend Adamantean’s services to anyone.”

Guy Thatcher – Hire-a-Camera

What is CBILS?

The Coronavirus Business Interruption Loan Scheme is operated by the British Business Bank (BBB) which is wholly owned by the Department of Business Innovation and Skills, in other words The UK Government, and it is open for applications from Small and Medium-sized Enterprises.

The CBILS scheme provides finance through a range of products delivered by a broad panel of independent lenders accredited by the BBB. There are currently 40+ accredited lenders represented by High Street banks, challenger banks, and other independent finance companies. Each of the lenders has opted for individual accreditation to be able to offer some, but not necessarily all, of the products from the following list:

  • Term Loans
  • Revolving Credit Facilities – Overdrafts
  • Invoice Finance – factoring or CID
  • Asset Finance and Leasing

How does the scheme work?

Lenders may offer repayment terms of up to 6 years, and the UK Government, via the British Business Bank, will pay a Business Interruption Payment (BIP) to cover the interest and any fees in the first twelve months whilst also providing a guarantee to the lender of up to 80% for any CBILS loan facility.

The scheme is intended to encourage lenders to lend in order to prevent small companies running out of cash and going bust. Any proposal will initially be reviewed on its own commercial merits by the lender, who may offer standard terms outside the CBILS scheme. If the proposal fails to meet commercial credit requirements then CBILS may be considered as an alternative.

Although the 80% Government guarantee has been widely publicised, the borrower remains 100% liable for a CBILS loan because the Government’s support is to the lender. In the event of a failure the lender will still pursue the borrower for repayment.

More information regarding Term Loan

£25k to £250k unsecured cash flow loan (not for wages)
Term: 12 to 60 months
First 12 months interest free – capital repayments only
No fees chargeable
No part settlements – although early settlement of outstanding balance is permissible
No personal guarantees for loans up to £250k
Loans above £250k may be subject to additional security requirement (NB. If personal guarantees are required, we may be able to assist with an insurance product)

More information regarding Asset Finance

£50k to £250k
Term: 12 to 60 months
First 12 months interest free – capital repayments only
No fees chargeable
Application for business purposes only (and excludes cars)
Business must generate more than 50% of its turnover from sales of goods or services
No personal guarantees for loans up to £250k
Loans above £250k may be subject to additional security requirement
Finance Lease, Hire Purchase and Refinance of existing unencumbered assets may be available, subject to additional risk appraisal and valuations.

Who can apply?

Borrowers must:

  • Be UK-based in their business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic
  • Self-certify that it has been adversely impacted by the coronavirus (COVID-19).
  • Lenders will need further information to confirm eligibility to meet their own lending requirements. These will vary for lender and borrower, and Adamantean can help and advise in this respect.

All lending decisions remain fully delegated to the accredited lenders.

Businesses from any sector can apply, except the following:

  • Banks, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • Further-education establishments, if they are grant-funded
  • State-funded primary and secondary schools

Before you apply, we may be able to offer you some advice or useful pointers. In some cases, we can help you with the application process, or we may recommend you approach your lenders directly. After a confusing start for all parties concerned, the scheme has settled down and we have been able to help many customers secure the necessary funding.

What Information will you need to provide?

You will need to provide certain evidence to show that you can afford to repay the loan. This is likely to include:
Latest filed accounts
Latest management accounts
Cash flow forecast
Business plan – which should include narrative on the direct effects of COVID-19 on your business
Details of assets to be financed (if HP)
Details of debtor book (if invoice finance)

Requirements will vary from lender to lender. If you do not have everything listed here, a CBILS loan could still be an option to provide finance to support your business, so call us on 020 3858 0161 or email contact@adamantean.net for an initial discussion about the best options to meet your requirements.