Your COVID finance window is closing!

Coronavirus, Finance, Videos,

Many businesses have already taken out either a Bounce Back Loan (BBLS) or a Coronavirus Business Interruption Loan (CBILS) but if you haven’t, OR if you think you may need more finance, NOW is the time to apply.

In this video we talked about how the window to these funding options is closing, and how to make the most of the opportunity now!

Throughout Lockdown and Coronavirus, we’ve obviously been trying to get as much information out to clients and contacts as possible.

The majority of people were very aware of CBILS (the Coronavirus Business Interruption Loans) and later the Bounce Back Loans that came along.

The majority of people we’re aware of that needed finance, have applied to finance; they’ve got their finance.

But we’ve heard over recent weeks that the requirements for CBILS applications have been eased and it has become easier to obtain finance through that scheme.

So what we wanted to do this week, is make sure that everybody is aware of the difference between the two options and the fact that as I say, the CBILS application process and the requirements for a positive result have been made easier.

Loan Statistics to 9th August 2020

There are some interesting Statistics on Gov.uk dated the 9th of August. These show that there have been a phenomenal number of applications under both schemes. Obviously, that’s to be expected because so many businesses have been adversely affected and have looked to finance to support them throughout the recovery process.

Bounce Back Loans

As of the 9th of August:

  • £34.96 billion had been lent
  • 1.157 million facilities
  • 1.4 million applications

CBILS

As of the 9th August:

  • £13.41 billion had been lent
  • 59,520 facilities
  • 121,000 applications
  • Around a 50% success rate

There’s a huge disparity between the number of CBILS applications and Bounce Back loans.

We don’t really know why this has arisen. It could be because CBILS were so much more difficult to get, whether it was because the entry amount was so much higher and businesses just felt they didn’t need that.

One thing that’s clear though, is the report from Capitalise.com that shows that the Big 4 High Street banks have taken 46.8 days to pay out on CBILS loans, while the alternative lenders have averaged just 17.3 days. We’ve certainly felt that the traditional banks have been far slower to respond and adapt to the changing needs of their customers.

The extra stress their delays have caused business owners has certainly not been helpful!

Scheme Closing Dates

If you are still unsure about whether you need finance, NOW is the time to decide and get your application in.

The Bounce Back Loans are available only until November, but CBILS are only available until 30th September, and the application process is still taking around two weeks if not longer.

It will be possible for banks to process applications after that date, but the initial application MUST be in by the 30th September.

There’s not very long to get a decision made, get your application in and deal with any queries and get funds sorted before they close.

CBILS Features

  • Borrowing from £50,001 to a maximum of £5 million.
  • The term is up to six years with nothing to pay in terms of interest or repayments or set up fees, etc, for the first 12 months.
  • There are no early repayment penalties, so if you do decide that you don’t need the funds or you don’t need all of it or you can repay it quicker, then you can just pay it back.
  • No personal guarantees required below the £250,000 mark.

Over 90 lenders are now approved, who have got themselves organised a lot better than they were, when we were all scurrying around, trying to work out who was going to be on the panel and who wasn’t!

You’ll have seen the Funding Circle TV ads I’m sure, but people like Iwoca are also in the marketplace and they do have funds, they are promoting that they do have money and that they are in the market and looking for people to lend to. So if you’re not sure it is possible to still get those funds.

We have heard that some of the banks are saying they have no more money to give to these schemes, another reason why now is the time if you’re not sure to make that decision and get that application in.

Bounce Back Loans

  • Borrowing from £2,000 up to £50,000.
  • A maximum of 25% of your turnover for the year to 31st December 2019.
  • No repayments or interest to be paid within that first 12 month period.
  • The interest rate on a Bounce Back Loan, is fixed at 2.5% annually.
  • Six year maximum term.
  • No penalties for early repayment.

If you do decide that you want to apply, if you can show that you’ve been adversely affected by Coronavirus and think you might need the funds, or if you think you may need the capital to help the business, or if the recovery hasn’t quite been as you thought it might be, it might be worth taking those funds, popping them in a bank account and having them on standby.

You can only have one loans, so if you have had a Bounce Back Loan and feel that you might need to go beyond and have another tranche of money, you may need to apply for a CBILS, which you will need to pay off that original Bounce Back Loan as well.

But obviously as ever, if you’re not sure do get in touch, do give us a ring. We can take you through the process and give you whatever support you need to do that.