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The Coronavirus Business Interruption Loan Scheme (CBILS) - Going, Going, Gone?

Client Support
Mark Brooks
10/09/2020
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The Coronavirus Business Interruption Loan Scheme (CBILS) is currently due to end on 30 September 2020, and necessary therefore for those business who have yet to take advantage of the scheme to consider making an application to allow sufficient time for it to be processed.

The government has reserved the right in the legislation to extend the CBILS scheme to 31 December 2020, although no such extension has been announced at date of publishing.

As a reminder, the CBILS scheme allows for banks to provide funding to business where they have been negatively impacted by Coronavirus, with the government securing 80% of the debt of the lender in the event of a default (providing appropriate steps taken during the lending process). This naturally increased banks’ appetite for lending as it lowers their risk. Likewise, the CBILS scheme offers benefits to the borrower with payment and interest holiday periods and no requirement for security (below £250,000)

When initially announced at the start of lock-down, the CBILS scheme was expected to run for six months, with an end date of the end of September 2020. Initially, there was an influx of applications to the approved lenders and significant delays in accessing these funds, understandably so as the lenders had to deal with a shift to working from home whilst designing and implementing new loan products and delivery methods whilst dealing with the changes made to the scheme as originally announced.

Over the last few months these lenders have now been able to successfully implement systems such that the speed of application has significantly improved. There have been further lenders added to the pool of approved providers as well. This all means that the process of obtaining a CBILS loan is now significantly more streamlined.

However, with the upcoming deadline fast approaching, it is important to understand that there could be a further final rush of applicants to the scheme and that leaving any application to the last moment may mean that you are unable to obtain the funding that you need as the time to process an application may increase.

This is particularly likely given that the end of the CBILS scheme coincides with the phased withdrawal of the furlough scheme support, as well as rent deferrals and tax deferrals, and many business may now have a clearer understanding of the impact on how their business is impacted by the effects of lock-down and the potential threat of future local lock-downs and restrictions across certain sectors.

Accordingly, we would encourage that for those business where cash flow forecasts suggest there may be a need to obtain funding in the coming months, to ensure that they allow enough time for an application to be processed.

Please speak with your normal relationship contact at Rickard Luckin to discuss any potential borrowing requirements, or if you are not currently a client but would like help and support please email us at [email protected] . We would be pleased to help support any review of potential funding required and an appropriate route to obtain this.

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