23 March 2020 Dave Farmer

Coronavirus – Grants, Funding, Schemes

Coronavirus – Grants, Funding, Schemes

  • covid19 interruption loans
  • covid 19 business funding options
  • CBILS business loans

In response to the current uncertainty and vast information about the schemes and funding on offer to businesses, we want to try and provide a separate view and clarity on what is available and what it means.

The Winter Economy Plan – 24th September 2020

The announcement of 24th September brings changes to the Interruption Loan and Bounce Back Loan Schemes. How these changes will be implemented and how quickly lenders will be able to introduce them remains to be seen.

The timescales attached to these changes may mean businesses have to be patient, if we look at the time taken from announcement to implementation previously then we expect a couple of week to pass before we see how the ‘enhancements’ announced will take effect.

Full details of what we know and how we understand things is detailed here.

Small Firms Bounce Back Loan Scheme

The latest Government-backed scheme is to launch on 4th May. Our thoughts on the scheme along with how we see the scheme operating are available here. The scheme is set for change and we await many of the finer details.

As a summary, what we know;

  • No need for future projections or forecasts
  • Business must be viable now
  • Self-certified by the borrower with a 100% Government guarantee
  • No cap on future claims by lenders to the Government in the event of borrowers defaulting
  • It will stop you from taking other Coronavirus facilities
  • Where a CBILS is taken it will have to repay the bounce back loan

Clarification on what this means is covered in this short video;

 

Business Interruption Loan Scheme (CBILS)

This scheme was launched by the Government to provide support to businesses that need an injection of capital or financial support. Details of the scheme are available here, the key points that were communicated at the outset have changed, mainly to make the scheme more attractive to businesses.

The key points as the scheme currently stands are;

  • For term loans and asset finance facilities, total term of up to six years
  • For overdrafts and invoice finance facilities, total term up to three years. After that time the guarantee will cease
  • Insufficient security is no longer a condition to access the scheme
  • For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be sufficient security, making more smaller businesses eligible to receive the Business Interruption Payment
  • No personal guarantees for facilities under £250,000
  • Personal guarantees may still be required, at a lender’s discretion, for facilities above £250,000, but they exclude the Principal Private Residence (PPR) and recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

The conditions of the CBILS scheme are now much more beneficial to the borrower. The issue is that demand is likely to exceed lenders ability to service those applications.

This means the borrower may be better looking at other finance routes or mitigating their personal guarantee risk where loans above £250k are being taken.

For more details on applying for the Coronavirus Business Interruption Loan and how to use the scheme for Trade Finance, Import Loans (replacing letter of credit) and Supplier Finance then watch the videos below;

Applying for CBILS

Using CBILS for Trade Finance (supplier finance, stock finance, letter of credit)

How to apply – Coronavirus Business Interruption Loan Scheme (CBILS)

Given the points above, the CBILS may or may not be the best way for the borrower to seek lending. The approval process and model will not be quick and may become overloaded with lenders having a concentration of borrowing on this scheme.

To try and make things a little simpler we have put together a simple document detailing;

  • The basic information needed to apply for CBILS
  • The supporting information required
  • The questions lenders are going to be seeking answers to and which should be covered by the borrower upfront

On receipt of the above we will;

  • Make contact with the borrower and with the benefit of the information held will look at the best options and point the client in the right direction

It should make it simpler and take away some of the worry and uncertainty.

The application document has been generated by using the information required from various lenders and condensing to make it simpler. There is a word document and pdf version for you to use.

Word Document – Coronavirus_Business_Interruption_Loan_Scheme

PDF – Coronavirus Business Interruption Loan Scheme – Summary Application

CBILS Affordability

The CBILS scheme details have been quite clear in the amount each business is eligible to borrow, the caveat is that each borrower needs to prove affordability. Affordability, as is generally the case, remains a guarded factor among lenders.

This video covers our view on affordability and what to expect;

Furlough Rebate Finance – Solving The HMRC Delay

With so many applications via the HMRC portal, there will be companies seeking a solution as to how they finance the upcoming payroll run if the HMRC rebate hasn’t come through.

There is a solution which allows businesses to finance the rebate and release cash immediately, solving any concerns they have about how the upcoming salary run will be paid.

This article gives the full story. The video below gives a quick 60 second overview.

Buy to Let Mortgages – Impact due to Coronavirus

One area where we are seeing big changes and big movement is the buy to let mortgage sector. We have seen huge variations among lenders with some reducing LTV ratios and tightening affordability whilst others are using niche valuers and continuing to lend.

This updated video gives you a better picture;

Business Grants – Coronavirus Business Rates Grants

The business rates grant scheme is being delivered by local authorities and will start to be made available from 6th April. The eligibility criteria are below;

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

You are eligible if:

  • your business is based in England
  • you are a business that occupies property
  • you are receiving small business rate relief or rural rate relief as of 11 March

For business who haven’t been asked to apply or received details from their local authority then this link allows you to find more details on your local authority.

Details on the grant scheme are available in this video;

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