Many small businesses that have applied for a government backed CBILS loan thus far have been offered standard overdrafts and loans – without the Government's 80% guarantee – on the basis that they fit the banks’ criteria for this type of lending.
The Chancellor has now confirmed that this is not the intention of his CBILS scheme and that from now on all businesses affected by the COVID-19 disruption should be offered a CBILS loan with the government guarantee. This change is underlined by the following statement in the press release:
“To maximise the support available, the Chancellor is extending the CBILS so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during this difficult time”
A summary of other changes to CBILS are set out below.
These two changes will provide further reassurance for business owners. Not only will their homes be protected – lenders are already prohibited from asking business owners to put their house on the line - but will also limit the exposure to other personal assets. Reassuringly, these changes will apply to finance already offered under CBILS.
Further changes include:
These changes should make it easier for small and mid-sized firms to get access to funding that will support their efforts to survive the COVID-19 disruption. Readers who need to make an application would be wise to revise their business cashflow and other projections prior to making an application. This funding is a loan not a grant. The impact of loan repayments and interest charges after the first twelve months need to be considered as part of this planning process.
We can help you consider your options and prepare the necessary forecasts.
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