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Posted on 29th March 2019
Business Interruption Loan Scheme/Borrowings
This was one of the measures introduced on 17th March to support businesses where the Government were backing 80% of loan applications and the Banks just 20%. However, the banks were not willing to take on the 20% risk without personal guarantees from borrowers and without a raft of information that couldn't be supplied by the lenders i.e. the scheme wasn't working due to the intransigence of the Banks
Changes were announced late last week (w/ending Friday 27th March) in the CBILS scheme, after pressure from the press and the business community, meant that all the main lenders agreed that they would not ask for Personal Guarantees for loans below £250,000. For loans above that, it is assumed that PGs will still be expected from all directors who own more than 10% of the company, as well as any other personal/corporate security which is available, although the scheme does not allow for lenders to take a charge over a personal private residence.
CBILS appears to have been opened up to the non-limited businesses now too, according to the Chancellor's comments recently (and on twitter @rishisunak"7) where he states " I know self-employed people are struggling right now, we've made sure you can access the business interruption loans"
So it appears that sole traders and partnerships can apply, although note that the min amount of a loan is £25,000.
The CBIL can only be offered if the banks have no other existing vehicle open to them from criteria bases with which to lend. Rates quoted in the press of 7-12% - lending platforms have advised rates of 30%!
It appears that the criteria for max loan will be the higher of 25% of 2019 turnover or double the annual wage bill. Lenders ready/almost ready to offer CBILS are:
HSBC, Barclays, Natwest/RBS, Lloyds, Santander
And 'Coming Soon' Aldermore, Skipton, Haydock, Metro, Hitachi
Banks are only accepting their own customers or those of challenger banks (incl Yorkshire/CYBG, Co-operative Bank, Arbuthnot, etc) so for the first tier, only apply to customer's own bank. But the alternative lenders will be taking applications from any business.
Other alternative lenders (eg Iwoca, Esme, Satago, Funding Circle) are still lending their non-CBILS facilities, but definitely lower acceptance rates, some sector restrictions and stricter processes.
For as long as the credit insurers support SME debts, invoice finance is still the least painful finance to access. Spotcap are not taking any new business but Market Finance are for their single invoice financing product.