We’ve had several conversations in the past few weeks with companies struggling to access the Coronavirus Business Interruption Loan Scheme (CBILS). As has been widely reported, it seems only a small percentage of firms are currently accessing the scheme.
It’s difficult for large lenders to mobilise an unprecedented scheme of this nature and former Bank of England adviser Richard Sharp has been drafted in to help, although it seems likely challenges will persist.
One of the critical issues is banks being asked to increase risk exposure—being unable to ask for personal guarantees is one example of this increased risk—with Chancellor Rishi Sunak imploring bank chiefs to “play their part”. Several lenders have subsequently pulled out of the scheme, and it has been left mainly to the larger lenders to process the 300,000 loan requests.
Inundated with requests, banks are focusing their efforts on the most robust businesses that would have been eligible for a loan four to eight weeks ago anyway. Any business with challenging circumstances won’t suddenly be eligible for lending.
This leaves a large pool of good businesses that don’t meet bank lending criteria and can’t access CBILS.
We’ve spoken to companies that are struggling to access CBILS at a few stages:
- Application: Lenders are looking for detailed projections before making lending decisions. This will vary between institutions, although typically detailed models, up-to-date financial statements and significant commentary is required. This degree of analysis is often beyond the skillset or time constraints of many SME directors.
- Post-application: For businesses that have been able to bring the information together, it can be a long wait for a decision. Lenders are busy processing a large volume of loans while managing the current client base, all with staffing shortages and new working arrangements to manage—expect decisions to take some time.
- Declined application: More and more businesses are likely to see loan applications declined as banks look to minimise exposure to risk.
While banks may be the first port of call, the alternative lending market can also help. If you need a loan, call one of the team at Reparo for more information. Here’s our process, in a nutshell:
- We work fast: We make loan decisions quickly; we can usually make an initial judgement on eligibility within a few days or even hours. If you are eligible for a loan, we put the process in place quickly so you can access the funds when you need them. If we can’t help, we’ll let you know quickly so you can start looking at alternative options.
- We’re flexible: Where banks apply a rigid set of lending criteria, our approach is significantly more flexible. We look at thewhole proposition before making a lending decision. If a business has a CCJ or is newly formed, we are happy to take a closer look. For us, the most important factor is the quality of the business proposition—that’s why we look at the whole picture.
- Terms tailored to you: We always try to tailor the structure of the loan to clients; this might be repayment terms that fit the shape of your cash flow or a specific structure. There are no early repayment penalties—if you need our lending as a short fix before re-financing, we can help.
If your (or your client’s) business is facing uncertainty, struggling to access bank lending or perhaps waiting on a CIBLS application, please get in touch and one of the team will be happy to discuss your options.
To discuss a loan of between £10,000 and £1m, please get in touch with Reparo at email@example.com or on 0161 451 5710.