The Coronavirus Business Interruption Loan Scheme (CBILS) has been extended to 30th November 2020 to accept an offer from an accredited lender, however, applications must be submitted by the 30th September. This decision by the British Business Bank has been welcomed by Capitalise as, after a well-publicised rocky start, CBILS has now become a core part of the government support for businesses.
Since its inception, the number of accredited lenders has grown from just under 30, to 98 across all lending products, distributing over £13billion to more than 60,000 business owners. All of these loans have provided the businesses with more liquidity and at lower rates than would be achievable in the “open” market. Crucially, with an average loan size of £225,000, these loans fall under the £250,000 threshold for personal guarantees. Personal guarantees are a mainstay of business lending, the absence of these have been the key to unlocking this capital.
Bounce Back loans were a stop gap for many businesses
Applying for these easy-to-access loans was an understandable reaction by many business owners. However, looking further ahead, many businesses have realised they need a more substantial level of working capital support to get back on their feet and to recapitalise their balance sheets.
The stark reality is that commercial lending outside of CBILs and Bounceback are working through the cycle. I have spoken much about the sequencing of the lenders and how they will return to the market. Whilst commercial property lending is the most buoyant of the products and closest to normal trading, unsecured lenders need positive EBITDA, Asset Finance require new assets to be purchased, or if refinancing they need to have been purchased in the last six months, Merchant Cash Advance lenders require footfall on the high street, Invoice Finance lenders require healthy debtor books etc. CBILs are filling the vacuum, until the natural market order can resume.
CBILs in our view isn’t a “nice to have” product for the Government to be able to support, it is a “must have”. My hope is that this is extended into 2021, but for now we must be grateful for the support into November. Via our platform, accountants have access to the widest range of lenders and products, both CBILs and non-CBILs, in the market for their clients, all available in one place.
Join our Lender Insights session with property finance specialists Hampshire Trust Bank where we'll explore what this extension means for the market. Alternatively, you can book in a consultation with one of the team or find more of our live sessions here.