Whilst doubtless we will all have an opinion as to the relative success of direct Government action during the Covid pandemic, it is hard to argue that business support has not been robust.
Principally this has been through grants (business rates/furlough) but also through the stimulation direct of lending via a network of over 100 accredited lenders through 3 schemes:-
- Business Bounce Bank Loans (BBLS) - A lender can provide £2,000 up to £50,000 subject to a maximum of 25% of a business’ turnover.
- Coronavirus Business Interruption Scheme (CBILS) - Funding available from £50k to £5m provided the recipient company does not operate with a restricted sector and has Turnover of less than £45m.
- Coronavirus Large Business Interruption Loan Scheme (CLBILS) – Facilities up to £200m, for eligible businesses with turnover greater than £45 million.
Whilst there are substantial variations in the schemes the basic premise is that: -
- The British Business Bank provides a Government Backed Guarantee to the accredited lender to encourage direct support.
- Recipient companies receive attractive terms through Capital and Interest Holidays and reduced overall costs via the inclusion of Business Interruption Payments (BIP) provided by the Government.
Whilst it is difficult to argue that the schemes have not been well accessed: -
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There remains however several challenges in regard to the overall scheme: -
- Accredited lenders are still running their typical processes – whilst there are examples of creative lending how do we really ask a business to forecast in the current environment?. This has often meant slow turnaround times meaning clients alternatively accessing the less burdensome BBILS scheme as a path of least resistance.
- A general lack of understanding of the scheme rules in that applicants can access CBILS even if they have a BBILS loan, they are simply required to repay the BBILS facilitiy. Similarly, a client can access more than one CBILS facility.
- The scheme by and large provided clients with a facility to bridge the highly disrupted trading environment, whilst the scheme has been pushed back to 31st March 2021 the economy has not returned to normal and there is an expectation that any further extensions of the scheme will be on less favorable terms.
- Facilities arranged at the conception of the scheme are now running off Capital Repayment/Interest Holidays with a collective lack of clarity from the accredited lenders as to approach given the continued impact of the pandemic.
At Pierce CF we have arranged over £60m of CBILS lending since the inception of the scheme and have robust relationships with the Accredited Lenders to ensure that the most suitable rather than easiest accessed finance is sourced. Given the impending deadline and the likely reduced incentives to accredited lenders it is highly recommended that the regions businesses access the scheme. Please get in touch to see how we can best assist you.