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We are fortunate to be working with leading organisations such as UK Finance and the Federation of Small Businesses. This gives us a unique vantage point in these uncertain times to get access to information early, so that we can share the latest guidance and advice with you.
As part of the Government’s package to support small businesses and their cash flow during this crisis, CBILS launched on 23 March 2020. The scheme aims to give SMEs financial support whilst providing billions of pounds worth of guarantees at a wholesale level to domestic banks across the UK.
You can access the scheme by visiting the British Business Bank directly, and enquire with each provider of your choice. However, we appreciate that this is a time consuming and lengthy process.
If you register through Finpoint, you can make one simple and easy application, saving you time and effort. We then do the hard work for you by checking your eligibility with our current list of providers. Not all providers are available through Finpoint at the moment, but more are being added. We can also use your application to suggest other funding options available to you.
The CBILS application requires more detail than a standard business finance application, which is why the Finpoint platform is streamlining the process to save you time.
The main reason for the additional information is to help lenders understand the impact of the coronavirus pandemic on your trading pattern. A key criterion of the scheme is to satisfy the lender that your business would be considered viable, were it not for the COVID-19 pandemic.
Businesses and individuals across the world are facing huge challenges in the face of the coronavirus pandemic. The requirement to stay at home and to social distance or self-isolate presents new threats to a wide range of businesses and services, and many businesses are forced to access finance in ways they previously have not done.
The UK Government recognises these challenges and have announced a new scheme to help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans between £2,000 and £50,000 spread over terms with up to 6 years.
The coronavirus small business Bounce Back Loan scheme aims to simplify the application process and was launched at the beginning of May. There are no fees or interest to pay during the first 12 months. Also, the government has worked with lenders to agree a low rate of interest (2.5%) for the remaining period of the loan. However, if you are accepted for a loan under this scheme, you won’t be able to apply for a CBILS loan later.
We’ve updated our platform to help you check which provider your business is eligible for. At the moment we feature 12 Bounce Back Loan providers and we may add to this number as more become accredited.
There are several reasons why you might get offered a business loan outside of CBILS:
- Not every business finance provider in the UK is accredited. You can check the British Business Bank website for the latest list of acredited lenders or apply on Finpoint and we can signpost you to those that we work with.
- Not every accredited lender can provide every type of finance that CBILS covers: the lender may have – based on your application – concluded that a non-CBILS product is a better match for your funding needs.
- CBILS launched with a caveat, whereby lenders were encouraged to offer loans on commercial terms where Government backing was not required. Access to the scheme has now been opened up further and you may therefore consider re-contacting your lender if you have previously been unsuccessful in securing fundinng.
Because the Coronavirus pandemic affects businesses in different ways, you will find that CBILS applications require more detail than a standard business finance application.
We have updated Finpoint to help you save you time when applying online, but expect to answer the following questions from lenders:
- The amount you are seeking
- What the funding will be used for — the lender is obliged to check that their finance product suits your business needs
- Your preferred repayment period — this is important, because lenders need to assess whether your business can afford the loan
- Management accounts
- Cash flow forecast
- Business plan
- Historic accounts
- Details of assets
The above list will vary for each lender, but what is a common theme is that you will need to provide evidence to show that your business can afford to repay the amount you are borrowing plus interest. Users of Finpoint have the use of Open Banking and accounting software integrations to help prepare their finance application in minutes.
Your business does not automatically qualify for funding. The eligibility criteria will vary for each lender, and as such each lender has the authority to decide whether to offer finance to your business or not.
A good way to think about this, is that the Government provides backing at a ‘wholesale’ level to accredited lenders. And then each lender turns CBILS into ‘market-facing’ products. In practice this means that some lenders will offer one type of product, and larger providers may offer several business finance options. To learn more about lenders’ requirements, see the British Business Bank Quick Eligibility Checklist.
As of 3 April 2020, the following product types are in scope:
- Term Loans
- Asset Finance
- Invoice Finance
- Revolving Credit (Overdrafts)
At launch of the scheme, there has been some confusion about the security businesses need to provide to qualify for a CBILS loan.
The Government has clarified on 3 April 2020, that lenders are banned from requesting personal guarantees on loans under £250,000.
For facilities above £250,000, personal guarantees may still be required, but:
- they exclude the Principal Private Residence (PPR), and
- recoveries are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied
If you have been offered finance and are unsure about the terms, you can request a callback from the team at Finpoint. We are always happy to try and help you review your options.
Yes, as with all business finance arrangements, your business will be charged interest by the lender. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied charges.
However, since each lender needs to turn the Government’s guarantee scheme into ‘market-facing’ finance products, there is no ‘standard’ interest rate.
Please also remember, any business borrowing funds under CBILS remains fully liable for the debt. As such, the usual considerations in terms of affordability, etc. do still apply, e.g.:
- If you decide to take on a term loan or asset finance facility, you may be repaying the funding and interest for up to six years.
- Overdrafts and invoice finance facilities in the CBILS can run for up to three years.
Finpoint continues to help business owners to access advice and support for free.
In our blog, we summarise the latest information about Covid-19 support for your business directly from official sources to help you get through these turbulent times.
Remember, Finpoint is free to use and features the largest selection of business finance providers in the UK, including those that are accredited under the Governments Covid-19 loan support scheme.