Coronavirus Business Interruption Loan Scheme – key considerations

24 Mar 2020

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Whilst lenders finalise the practicalities of the Coronavirus Business Interruption Loan Scheme (CBILS – see here for more details) and we await further details of how businesses can access it, please see below for some practical points to consider.

 

  • Your first port of call should be your incumbent bank. Although Government guidance states this should be through the bank’s website, we recommend you also seek a direct dialogue with your relationship manager as soon as practically possible. More than ever, communication is key.
  • The lenders currently participating in the scheme are listed here. If the lender is not listed, it is unlikely that they will be able to help in the near future as they will not be set up or incentivised to offer business interruption loans. In the interests of speed, the current list is primarily based upon lenders already set up to operate through the existing EFG scheme. However, we understand the list of accredited lenders will be expanded as a higher number are required to meet the expected level of demand for these loans.
  • If your incumbent bank is not currently participating, it would be worth approaching another lender on the list. Please get in touch if you would like help with this.
  • CBILS is being administered through the British Business Bank (BBB) and we understand that the application process will involve filling out various BBB forms. Details are to follow and we will provide an update when we know more.
  • Businesses should ensure that certain key aspects of their financials are up to date, which as a minimum should include:
    • annual statutory accounts for the previous two years,
    • management accounts covering the previous two years,
    • reconciled to the statutory accounts; and
      forecasts covering at least the next 12 months.
  • With regards to forecasts, we recommend you aim to provide:
    • a version based on the business’s original budget (prior the impact of the Coronavirus) to demonstrate the viability of the business; and
    • a version which is based on new assumptions, factoring in any reduction in expenditure, the impact of furloughed workers through the Job Retention Scheme, VAT deferral, HMRC Time to Pay, and reduced business rates. This should show the funding gap which the business interruption loan will bridge.

Further details of the scheme, including how to apply and how we can help, can be found here. Please get in touch for further details

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