Last week I saw the final lending figures for Coronavirus loan schemes. The highlights: £79.3bn of loans to 1.67m businesses across the UK Businesses across the…
Whilst funders are still finding their feet with specifics of the CBILS, we are working hard to assist applicants with the scheme and hopefully help facilitate a more efficient application process. I hope the following is useful in this regard.
Steps to take:
- Consider / project your funding need and consider other sources of funding and / or actions to reduce the funding requirement (find more information here). I would suggest this step involves the preparation of outline financial projections and consideration of the various government support initiatives
- Check your business is eligible for CBILS – eligibility criteria are contained here and / or CBILS webpages. Note that there is a requirement to demonstrate your business was (and will be) viable and that the funding requirement is down to the impact of Covid-19
- Review the list of accredited lenders and choose one (or more?) that matches your funding need – I would suggest that your main existing lender is the most logical first port of call
- Read what materials your chosen accredited lender(s) have on their website about CBILS including advice on specifically what information is required by them. Where possible open a dialogue with your chosen lender
- Prepare your ‘funding pack’ and make sure you have answered all questions and collated the information required. We have a template that may assist you in this regard (see further below)
- Sense check your funding pack and projections and ensure consistency between narrative and figures. [Note: for at least one of the accredited lenders some of the information that we would put in a pack is to be entered on a pre-prepared document. However, we still feel the process of pulling the pack together is worthwhile especially for larger sums as it should leave you better prepared to answer follow up questions and facilities a fuller self-review of the business and its ability to repay the debt]
- Rework your projections with any lending offered. Stand back and fully consider the implications of taking on the additional debt and the security arrangements (including personal guarantees)
Accredited lenders, the offerings and information required
As one of the accredited lenders stressed to me, CBILS is not the Government putting any more cash into the system. It is instead encouraging the deployment of the lenders’ funds by part guaranteeing default risk. Therefore, the products; the interpretation of the scheme guidelines and the loan decisions will be determined by the individual lenders, not by the Government. Consequently, there will be differences between lenders – some lenders may state that you are not eligible for CBILS as they can support you without this.
See below an overview of the approach taken by high street banks. We have set out links to the portals (where applicable) or given an indication of approach (I will look to update as we get more information on other lenders).
|Lloyds Bank||Three eligibility checklists – it would appear you need to answer yes to all questions before proceeding with enquiry form.|
|Nat West||CBILS listed as a possibility for three of the bank’s products. We have had sight of their ‘CBILS Fact Find’ sheet to be completed and sent to your Relationship Manager. Includes requests for a number of items listed below.|
|Barclays||Online eligibility checklist (starts with: Have you experienced a loss in trading or any impact on business performance as a consequence of coronavirus?) and suggests that you then call your dedicated relationship manager or 0800 number to start your application.|
Based on our current understanding of the scheme (and general good practice) we would advise that your funding pack includes:
- The funding requirement
- A clear demonstration that the business was profitable in the 12-24 months prior to the crisis / would have been viable if it weren’t for Covid-19
- Year to date management information pack to include profit and loss, balance sheet and aged debtor/creditor summaries
- Cash flow projections for the next 12 months (*) with more detail/ frequency in the short term focusing on the timings of cash-outs
- Details of the actions management have or are taking to manage the crisis
- Details of any security that is available
(*We would strongly advise clients to project beyond the 12 months to satisfy themselves on ability to repay.)
PKF Francis Clark
As noted above we have a template to assist you in structuring your application for CBILS (and / or other debt funding) and I can share this with any interested clients. I am also working with colleagues on an excel workbook for us to work with our clients in preparing some of the financials (projections) that we see as integral to an application.
On a related matter we have links direct (and / or via platforms such as Capitalise and other brokers) to a variety of debt and / or equity providers.
Any questions on the above please do not hesitate to contact me or your usual point of contact at PKF Francis Clark.