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Advice from the experts: Securing finance for COVID-19 recovery

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Ben Johnson

Aug 6, 2020

It’s been over four months since the Government-backed Coronavirus Business Interruption Loan Scheme (CBILS) and business Bounce Back Loan Scheme (BBLS) were introduced. Whilst there has been huge uptake of these loans, many businesses have still struggled to access them.

As UK high streets reopen and businesses start to trade again, we know that operating costs will be rising and for many, access to finance will be essential to their recovery.

I recently hosted a live panel session with three experts in the lending space. We discussed the latest updates to the schemes, alternative options available for those who might have been rejected and much more. I was joined by Katrin Herrling, CEO and Co-Founder of SME lending marketplace Funding Xchange, Mat White, Accounting Relationships Manager at iwoca and Tom Davenport, Head of Partnerships at MarketFinance

Here are some of the key takeaways from the session. You can watch the full panel discussion on the recording below, or download our dedicated guide which is packed full of tips and tools to help you apply for finance. 

CBILS and BBLS – what’s the latest?

Since being introduced, over 1.1 million BBLS loans and over 57 thousand CBILS have been approved (as of 21 July 2020). Despite these high numbers, less than half of those who applied to CBILS have been approved so far. 

For those who weren’t successful the first time or are still considering a loan, some things have changed. Here are the key things to be aware of: 

  • Some businesses without existing relationships with the main banks have struggled to access CBILS. However, The British Business Bank has now authorised more than 100 lenders – including high-street banks, challenger banks and regional and specialist lenders. 
  • Alternative lenders tend to be open to new customers, so these additions can be a good option for those who might have been rejected before. You can see the full list here
  • For CBILS, the ‘undertaking in difficulty’ loss test has recently been removed from the criteria for those with fewer than 50 employees and less than £9m turnover – opening the scheme up to more businesses.
  • For businesses that have been performing well during Covid, commercial lending is starting to pick-up again so it’s worth considering non-Government options too. 
  • CBILS is currently due to end in late September. The Government may choose to extend the scheme, but those considering it should talk to their accountant soon so they don’t miss out. BBLS is currently set to end in November. 

Download the guide

Preparing an application

It’s important to remember that you’ll need to repay 100% of any loan – regardless of whether it’s government backed. Here’s a recap of some the experts advice on preparing an application:

  • The BBLS has less stringent criteria, so before making a commitment make sure you talk to your accountant. Funding Xchange research shows up to 60% of businesses who have taken a BBLS will struggle to repay them.
  • Before taking out any type of loan, build a solid repayment plan and financial forecast. This will help you work out if finance is right for you. We recently launched our Business Snapshot tool that gives you a visual dashboard of key financial metrics showing your business performance at a glance.
  • With some of the alternative lending options, the time it takes to get a decision on a CBILS application is much shorter which can help with planning – especially if capital is needed fast. For example, iwoca gets a decision back within 3-5 working days. 
  • For most alternative lenders, the key things you’ll need when applying for a CBILS are bank statements from November 2019. If you want to borrow over a certain amount, you’ll need to provide an 18 month cash flow forecast too. 
  • Alternative lenders like MarketFinance and iwoca also integrate directly with your Xero account, meaning it can just take a few clicks to submit the data needed. 

Top tips when considering financing

We asked our expert panellists for their number one piece of advice for businesses when applying for capital. Here’s what they said:

  1. Katrin from Funding Xchange: “If you have been declined by one of the schemes, understand why by asking the lender what the issues are. Secondly, don’t despair if you have been rejected. It’s just that specific lender which can’t support you, there are now alternative options you can consider.”
  2. Mat from iwoca: “Preparation is key. On affordability, don’t just guess how much you need. Sit down with your accountant and work out everything from short, medium to long term needs. Go through all scenarios for what your revenue bounce back might be and how much you can afford to take on based on this.” 
  3. Tom from MarketFinance: “Think outside the box. If you’ve been declined by CBILS or have one but need additional funding, there are options beyond term loans. Consider other options like invoice finance for example. Push your advisors to think outside the box and lean on them to help understand all your options.”

Download our dedicated guide on accessing finance for recovery. It will help you understand the options available and what to consider before applying for a loan. 

Visit our dedicated site for more resources, webinars and inspirational stories to help you navigate the COVID-19 pandemic. 

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