Following widespread criticism of the CBILS, which has resulted in a lack of uptake so far, the Government has announced welcome changes to the scheme. Many customers have complained of lenders requiring a personal guarantee and applying high interest rates that become payable after the initial 12 month interest-free period. The key changes to address these issues are detailed below:
• Applications will not be limited to businesses that have been refused a loan on commercial terms, which has the impact of increasing the number of businesses that will benefit from the scheme.
• Banks will be banned from asking company owners to guarantee loans with their own savings or property when borrowing up to £250,000.
• Larger firms with a turnover of up to £500m will also be eligible for more help – with state-backed loans of up to £25m available to firms with revenues of between £45m-500m.
However, the Treasury has not capped the interest rates banks can charge, and therefore we expect that there will be a range of interest rates applied by the 40+ lenders that are registered to lend under the scheme.
It is our understanding that all lenders are receiving huge volumes of applications from business seeking to utilise CBILS so it is important that these applications are correct first time, and most importantly, are supported by robust and realistic business plans and cash flow forecasts. The CBW team is here to assist business owners and directors with getting their application right first time and reviewing and/or preparing the financials to support the applications.
For more information on the Coronavirus Business Interruption Loan Scheme, please read our original article. If you have any questions or concerns about the CBILS, please get in touch with a member of the Corporate Recovery and Insolvency team.