SMEs pushing through loans ahead of the CBILS deadline

SMEs looking for loans of more than £50,000 under the Coronavirus Business Interruption Loans Scheme (CBILS) are now pushing through applications to make sure they can secure their finance before the scheme ends in September. CBILS launched in March 2020 and was one of three Covid-19 business loan schemes announced by the Government to help companies struggling to trade due to the Coronavirus lockdown. The CBILS scheme gave businesses a six-month period within which to secure 12 months’ interest-free finance across business loans, asset finance, invoice finance and business account overdrafts.

Applications for CBILS increased by 3,729 in the last week (up to 26 July), the greatest weekly increase since the end of June. The scheme has faced some criticism as businesses faced delays to get their lending approved and only half of those applying were successful in securing finance. Up to close of business 26 July, more than 57,000 businesses have received £12.7bn in lending through CBILS.

The most successful of the trio of business loans made available under the Government’s Covid-19 scheme is Bounce Back Loans. These loans of up to £50,000 were introduced over a month later and came with 100% backing form the Government. This means while those businesses taking a Bounce Back Loan remain completely responsible for paying it back, the lender can call upon the Government to repay the debt if the firm defaults. So far, Bounce Back Loans have supported over 1.1m businesses with over £33.7bn of loans. On average, four out of five businesses that apply for a Bounce Back Loan are accepted.
The final loans scheme available to businesses is Coronavirus Large Business Interruption Scheme (CLBILS) loans, aimed at the largest businesses that want to borrow up to £200m; £3.1bn has been lent to 457 businesses.
In total, these three schemes have now reached over £49bn of lending to 1.17m UK businesses, an eye-watering amount of business borrowing that was unimaginable before the Coronavirus pandemic. It’s a stark contrast to July 2019, when businesses repaid £2.5bn of debt, the first net repayment since February 2019 and as result reduced the overall growth rate of business lending.

AC Tyres Limited successfully secured a £100,000 business loan from 1pm plc, a specialist loans provider. The firm offers sustainable tyre disposal services across the UK and its business was disrupted as garages closed during lockdown. The reduction in income meant that it needed a cash injection.

1pm plc only works though a panel of selected brokers and this means that businesses cannot make an application directly to the lender and must instead use a broker. Business loans brokers have played an important role during the crisis, helping businesses to find the lenders most likely to accept them for a loan and managing the criteria and paperwork required for a CBILS loan. Without brokers available to manage eligibility and applications, lenders would have seen their own operations even more inundated, further delaying the time businesses had to wait to receive funds.

AC Tyres used Halo Corporate Finance Limited as their broker who then worked with 1pm plc to secure the funding.

Alun Winter, head of loans at 1pm plc, said: “The CBILS scheme is a vital lifeline for many SMEs and as a delivery partner we are committed to working with our broker partners to ensure our funding solutions reach those who need it.
“Stepping in as a supportive funder, we help UK businesses like AC Tyres navigate through these uncertain times and come out of the other side stronger.”

Andrew Sommerville, director at AC Tyres, commented: “We initially struggled to find a financier who would listen to us and package a solution that could support us during these challenging times.
“1pm and Halo understood the challenges we were facing and worked quickly to provide us with a funding solution. Within a week or two of our application for a CBILS loan, we received our funding.
“The quick turnaround has been instrumental in helping us kickstart our operations as Government guidelines begin to relax.”