Insights 08.7.20 Author: Pablo Jorge

Alternative Funding Options if Your Business is Not Eligible for CBILS

Insights 08.07.2020 Author: Pablo Jorge

As the lockdown is eased and businesses prepare for the return to work in the ‘new normal’, many SMEs continue to seek financial support after being turned down for a CBILS loan or realising that facilities under the scheme are simply unsuitable to their needs.

More than three months after Chancellor Rishi Sunak made the CBILS available to eligible businesses, data released by HM Treasury, as at 7th July 2020 shows that over £45 billion worth of facilities have been approved through the different loan schemes, £11.5bn of which went to CBILS applicants with around 50% of the applications (53,536 out of 107,309) being successful.

While CBILS may have proved to be the saviour for many SMEs, many other businesses remain ineligible for funding for numerous reasons. It should not be forgotten that there remain alternative sources of finance for your business, often under more flexible and bespoke terms.

A wide range of non-bank lenders including alternative capital providers, private debt and direct lending funds, and specialist and FinTech lenders are, outside CBILS, actively looking for suitable opportunities and having continued appetite to support SMEs during the crisis.

These non-bank lenders grew to maturity out of the chaos of the Great Financial Crisis (GFC) in 2008 as the banks retreated and have nowadays amassed a significant level of “dry powder”, or capital available, to deploy of $261 billion globally at the end of 2019 ($292 billion at the end 2018) which is ready to lend out to SMEs in the UK. (Source: Prequin data).

Non-bank lenders can offer flexibility, speed of delivery and tailored solutions to borrowers; attributes much needed during these times. Solutions range from cash flow, asset based, supply chain and working capital facilities, delivered across the debt capital structure including senior, junior and mezzanine debt, and hybrid structures.

It is not only businesses in sectors that have been clearly benefited from the pandemic such as food, healthcare and IT services, that are attracting the interest of non-bank lenders, but also those that have proven to be resilient and are able to transform the new challenges into opportunities or have a clear plan to survive and thrive through and after the crisis.

Whether your business has a short track record but perhaps a strong order book, or is reliant on the successful development of a new product to boost sales, or lacks sufficient tangible security to offer as a guarantee, or even confronts a higher level of uncertainty in its sector, debt capital markets are wide and deep enough to most probably offer a solution to your funding needs.

However, navigating debt capital markets can be difficult at the best of times given the range and diverse nature of options available which makes the use of an experienced advisor key for most SMEs in need of funding.

Sadly, lack of access to CBILS and restricted lending will mean that many companies will struggle to raise debt from traditional bank sources, when it is so vital to ensure continuity of their business. But we are here to help.

How can we help?

We talk to non-bank lenders on a daily basis and are able to give our clients access and advice towards securing funding from these lenders. So please contact a member of our Corporate Finance team to discuss your funding requirements.