Time to funds
A significant factor in the lending process is the “Time to Funds”. I.E how long does it take from submitting an application to receiving money in your account to pay e.g. rent, payroll and suppliers.
Our estimation is that this will be around 2 - 4 weeks for unsecured (meaning mostly term loans or invoice finance) and 4 - 12 weeks for secured (lending secured against property, assets etc).
The reason for this is that secured finance will typically require processes such as property valuations or second charges. Many of which take multiple weeks even at the best of time.
As a result, businesses may wish to apply for non-CBILS products alongside CBILS to have a wider range of options to choose from.
How does it work on Capitalise
Capitalise has set-up a dedicated flow on how to
- Start an application
- Complete the required documentation
- Decide to add in non-CBILS lenders
For business owners
Our initial workflow is for accountants and advisers. If you as a business owner wish to apply for a CBILS loan then you may wish to go direct to the partner page or contact us to create an application for you.
Lender documents required
- Last 3 years full accounts with detailed P&L - ensure serviceability
- Last 6 months business bank statement - accountant conduct
- Up to date management accounts - ensure serviceability
- Aged debtor and creditor lists - ensure payments are on time
- Confirmation of any outstanding debt (provider, term, repayment)
- Statement of assets, liabilities, income and expenditure from Director/Shareholders
- Cashflow forecasts used to determine the working capital required
And the information required
- What is the purpose of the requested facility (short term cash flow/longer term cash injection) and how will the funds be specifically used to address the shortfall caused due to COVID-19?
- Please provide detail on the amount of the borrowing request and how this amount has been derived. eg. How much are you requesting and why?
- On what basis has the amount been calculated? What assumptions are being used? Is it likely further borrowing at a later date will be required?
- When the Pandemic is over, how long do you think it will take your business to recover?
- What changes are the business making in the short and longer term to help drive business performance back to either pre virus levels or beyond?
- What was your Annual Sales Turnover for 2019?
- What was your Annual Wage Bill for 2019?
- Please provide the current number of Employees
- What are the costs you currently have to pay in regards to running the business e.g. staffing costs, business premises costs, stock and or/other debt costs and what are you doing to reduce these?
- What have you been able to access in terms of government schemes in response to Covid-19 (Grants/rates non-payment/VAT deferral/Time to pay arrangements)? - please provide details
- Is all tax up to date
1. How do I access the other lenders?
Capitalise has onboarded lenders who were accredited for the EFG scheme prior to the launch of the CBILS and so these are available immediately. We’re working on onboarding more of the CBILS accredited lenders to widen the group of lenders.
2. What happens if my bank isn’t on the CBILS list?
Right now, most of the high street banks are accepting CBILS applications only for customers who bank with them. As a result, if you or your client do not have business banking with a high street name then applying to other lenders may result in more traction. New lenders are due to join the scheme over the coming weeks.
3. Do I need to offer a personal guarantee or my house as security?
At present, the government has indicated that primary residence is not required as part of the CBILS security for the majority. The Big Four banks have agreed that they will not take personal guarantees as security for lending below £250,000 under CBILS.
4. Can I refinance loans?
While EFG were not available for refinancing the CBILS scheme, the government has shared guidance that CBILS is expected to be available to refinance existing loans. This will be part of the underwriting process from each provider.
5. Will a firm always get a CBILS loan?
Businesses much be eligible for CBILS products based on their business history. The business must:
- have experienced a loss in trading or any impact on business performance as a consequence of coronavirus
- have been able to afford this lending before the coronavirus outbreak
- be based in the UK, with a group turnover of no more than £45 million per year
- not be subject to collections proceedings or collective insolvency proceedings (for most lenders)
Each will be subject to underwriting decisions of the each lender.
6. Will a CBILS loan always be interest free?
A CBILS loan is interest free for the first 12 months as the government will pay the lender interest for that period.
As banks are now able to offer interest free CBILS loans even if a business qualifies for an existing lending product then all CBILS loans should be interest free for 12 months. After 12 months the product will revert to the pricing in the loan agreement - so this must be considered when taking the product.
7. Will Capitalise be paid commission for introductions?
Capitalise is paid a commission for non-CBILS lending and may be paid commission for CBILS depending on the provider. The CBILS scheme will remain free of fees to access whether this is accessed through Capitalise or directly.
8. Get funding under the EFG is not easy or quick, SME's need this money now not in 3 months time, what is the solution?
Our expectation of the CBILS loans would be available in 2 - 4 weeks for unsecured and over 4 weeks for secured. Our recommendation is to run applications for CBILS in parallel and also non-CBILS alongside to receive a wider choice of offers.
Last Update: 20th May 2020.