Coronavirus Business Interruption Loan Scheme (CBILS) – a practical guide

As demand grows for the Coronavirus Business Interruption Loan Scheme (CBILS), we are here to support you and your business through the decision making process. As the details of the scheme continue to emerge and the banks receive applications, the process for approval gains clarity.

At Mercer & Hole, our team are regularly speaking to many of our long standing banking contacts and the approach to the CBILS application process will vary depending on the bank.  All banks, there are 40 plus approved lenders on the British Business Bank website may take slightly different approaches to getting the loans into the market place. However, it already seems, the easier a business makes it for the bank to approve their application, the quicker an application will be dealt with and more likely it is to be approved.

Please see below practical key information for you;

• Confirmation of your eligibility for the scheme, there is a quick eligibility checker attached, make sure you are eligible and the bank can quickly see the same
• Presentation of historic financial information demonstrating previous viability
• 2020/21 forecast (pre-coronavirus) demonstrating previous forecast profitability
• Sensitivity analysis on previous forecasts to show expected impact of Coronavirus on future trading
• Cashflow forecasts showing the cash requirement to continue to trade during the effected period
• High level post disruption forecasts, including repayment of CBILS loans, to show expected ability to repay the loans
• Confirmation of assets available for security (or lack thereof).

Please note all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible.

Personal guarantees are not required to secure lending below £250,000. For any borrowing above £250,000 personal guarantees will be capped at 20% of the outstanding value of the loan.

We would also like you to be aware that each lender has taken a different approach to personal guarantees but according to The British Business Bank, lenders cannot take security under a personal guarantee against a borrowers primary residence.

As set out above we are well-placed to assist you in the submission of applications to your lender under CBILS.  Mercer & Hole’s knowledge and insight will aim to make the process easier for you. We are here to support you, if you wish to discuss this further please do not hesitate to contact your usual Mercer & Hole contact or a member of the team.