Coronavirus Business Interruption Loan Scheme

Intro
Welcome to the Century Business Finance Hub, with Jon Maloney and Ben Larkins helping you understand everything about business finance, how it works, how and when to apply to make sure you get the right deal. This is the Century Business Finance Hub.

Alex Curtis
Hello and welcome to the Century Business Finance Hub. I’m with Jon and Ben it is currently March 24th 2020.

And we’re kind of in the midst of the whole sort of coronavirus situation. And there’s been an announcement about sort of business interruption loans, although there’s not a lot of detail. So guys just wanted to kind of ask you what business owners can do at the moment. There’s probably a lot of people worried about the cash flow. And it doesn’t feel very clear whether this loan is for cash flow or not. There’s some guidelines. Where are you guys at with it?

Jon Maloney
It’s an interesting one, Alex, so we’re in the dark a little bit as well as most businesses I think are because only got released yesterday. So I’m sure that once a few businesses have sort of been through the process of applying for one and had decisions back, we’ll probably know more maybe by the end of the week, beginning the next but I mean, don’t get me wrong, first and foremost, what the government are doing by supporting small businesses with cash boosts for cash flow for staff, whatever. It’s got to be done because this is a totally unprecedented situation that we’re in that you know, so it’s all good on that all good on that front. But there’s just a couple of bits that, to say I’m concerned that’s maybe a little bit of an overstatement, but maybe it’s one of those things where if something looks too good to be true, sort of situation, I hope it’s not. But there’s just a couple of bits I’ve read on the on the British Business Bank website, one of which it says smaller businesses from all sectors can apply for the full amount of the facility, to be eligible for a facility under the scheme and SME must and there’s a part about you need to have turned over less than £45 million, that’s fine. But there’s one here and it says, have a borrowing proposal, which were it not for the current pandemic, would be considered viable by the lender, and for which the lender believes the provision of finance will enable the business to trade out of any short to medium term difficulty, which is fine. But first sort of glance that looks to be that the lender wants you to have some sort of business plan or a project in mind that you were going to embark on. And then it’s sort of been scuppered by the, the Coronavirus, whereas I think the majority of small and medium sized businesses at the moment they’re experiencing cash flow problems, now cash flow is, this coronavirus hit so quickly, that cash flow has been this looks like a tap, you know, somebody turn turn the cash flow tap off overnight. So how many businesses out there would have a borrowing proposal ready to submit to a bank?

Ben Larkins
Well, the answer to the answer to that question is not very many, I wouldn’t have thought.

Jon Maloney
Why would they This is the cash flow problem. Pure and simple. That’s it.

Ben Larkins
They’ve also announced as well, haven’t they, the really, really low interest rates the 12 month interest free which again is as Jon alluded to, is a brilliant, brilliant thing. But again, on that British Business Bank, just on the eligibility, there’s another thing as well, if the lender can offer finance on normal commercial terms, without the need to make use of the scheme, they will do so. Which to me reading between the lines also gives the government a little bit of an out if they don’t particularly want to allocate all of that £300-400 billion or what it is, I’m not quite sure of the figure that they said. And then they want the banks just to take over and offer probably over the 3% with normal interest terms. It just seems that a small business is getting penalised for something that they’ve got no control over. So hopefully, these are just the sort of eligibility criteria at the start, but hopefully, it’s all relaxed and these businesses can can get this money fairly, fairly quickly for cash flow purposes, which will allow us to start over because if we don’t, then I think the UK could have a very large problem in the SME space in the next few months.

Alex Curtis
Yeah absolutely, I think the SME market pay the most kind of tax, employ absolutely massive amount of people. I’ve seen a lot I’m in a lot of WhatsApp groups with other business owners and a lot of them screenshot and emails have sort of they’ve had customers for years and they’re cancelling projects retainers saying maybe we’ll look at this but the money that we owe you we can’t give you straight away that this affects that like all the way down the chain just feels like a, like you say, an emergency cash flow situation.

Ben Larkins
Yeah, even I think the larger end of the SME market as well. I mean, you look at what’s happening at the moment in the sporting world you’re seeing football in the lower leagues being completely decimated by having no income, you’re looking at rugby, they’ve all been really, really struggling to make ends meet and I think I think it’s a it’s a massive, massive issue that I think the government were totally right to come out with and and release what they have. And we hope that it is what it is.

Alex Curtis
Yeah, absolutely. So what can I do now then as a business owner, it’s what I have to say 24th of March, let’s say payroll is like, coming up is the end of the month like Monday or maybe people do it on a Friday or whatever.

Ben Larkins
The end of the month, Tuesday, I mean, we have a lot of our funders that we deal with have been, we’ve had emails and that they’ve been very supportive of the SME market at the moment. There’s no caveats as to who they’re going to lend to. So they’re still lending in retail, they’ll still lend to to restaurants, hotels, or be it on a more of a stringent underwriting process, but they have said they will support those businesses. So what we would say in the first instance is probably give the business interruption loan scheme a try. See how quickly you’re going to you’re going to get the finance and then perhaps try like a commercial finance broker like ourselves or another one just to see what your cash flow options are as well in the in the interim.

Jon Maloney
I think the key thing with this with this government scheme, it’s it’s been billed or it was advertised when it was advertised as the wrong word. When it was sort of released by Boris, and the chancellor, it was all geared up, it was very much we’re going to help you with your cash flow. And as we all know, being all business owners, cash Flow is an immediate, immediate issue. It’s no good applying on a Monday and then maybe having an answer mid the following week, because withb a cash flow problem, you might not have a business and you know, certainly in this current climate, you might not have a business by the middle of next week. So it needs to be within within a couple of days minimum, I’d say.

Ben Larkins
I think minimum fast as well, because a lot, a lot of these business owners are going through enough with the stress of having to potentially lay staff off and things like that. So any added stress is not really welcome. So I think it’s got to be as easy and straightforward as possible as well.

Alex Curtis
Yeah, I think people are busy sort of nurturing relationships, looking after planning, as well as looking at where they can cut costs are going to be busy, mega busy, doing all sorts of things, I suppose. We don’t want to be on the phone waiting for lenders. Like I say, hopefully there’s some kind of easy online thing, quick decision and just get some clarity. First, we need to wait and wait and see. So do you think you’ll hear something more? Do you say maybe later this week, early next week on a bit more detail, do you think?

Jon Maloney
Yeah, I think so. I think I think sort of tail end of this week, we’ll probably hear. And not just that this is not just like maybe exclusive information to us that this is might be out there in the public domain, but maybe we’ll find out just how easy this interruption loan scheme, how easy it is to get access to because you know it came out yesterday. I’m sure there was millions applied yesterday, you’d like to have thought by the end of the week. Those millions will either have a yes or no, you know? Yeah, you’d like you’d like to think that by the end of the week, everybody’s saying this business loan scheme is amazing. And it’s the greatest thing that they’ve done. On the flip side of that coin. They could be saying, well, this is all a load of. Yeah.Yeah, exactly. Yeah. But we don’t know. We don’t know.

Alex Curtis
Absolutely. So it’s best just to kind of like you say get my options covered, not just put all my eggs in that one basket.

Jon Maloney
As I said you know do but by all means you know you’ve been a business owner you you cannot say no to 12 months interest free money certainly in the current climate so yeah absolutely go out and go to your bank speak to your relationship manager if you’ve got one, try and get the business loan scheme but maybe just apply with somebody else you know, but obviously us or one of the many other brokers there are in the country there’s plenty of good ones and just have that in reserve because it’s all about acting quick if on Friday the you know the interruption loan scheme the lender comes back and says no, not a chance we can’t do it for you. You need to have something in place real quick. So yeah, that’s that’s personally what I’d do. Go through go through the go through the steps of getting the interruption loan scheme, but at the same time, just have a bit of a backup Absolutely.

Alex Curtis
Ben, have you got anything to add?

Ben Larkins
No, I don’t think so. Yeah, just as what what Jon was saying there is there’s plenty of there’s plenty of options out there for the SMEs if if this is taken a little bit longer than usual. So yeah, get in touch, go on our website. There’s plenty of really, really good, useful information for you to have a look on. And yeah, we look forward to hearing from you.

Alex Curtis
Awesome. Thanks, guys. Well, we’ll catch up again, when we know a bit more got bit more info and we’ll put another episode out and yeah, good luck to everyone that is applying and hopefully, like you say, it is as good as Boris Johnson says it is and everything will be alright.

Jon Maloney
Fingers crossed. Fingers crossed. Let’s hope so.

Ben Larkins
Absolutely. Thanks, Alex.

The Coronavirus Business Interruption Loan Scheme (CBILS) provides lenders with a government-backed 80% guarantee, which means that lenders are able to approve more loans where they perhaps may have refused on the grounds of credit issues or complications.

The scheme can be used to support:

Term facilities
Overdrafts
Invoice finance facilities
Asset finance facilities

Am I Eligible?

To qualify for the scheme, you must:

Be UK based

Turnover less than £41m p/a

Operate within an eligible industrial sector (there are a small number of industrial sectors are ineligible)

Have an appropriate business proposal and you may not have sufficient security to meet a lender’s usual eligibility requirements.

You’re able to borrow from £1,000 to £1.2m and terms can be from 3 months to up to 10 years.

The need for financing

Many businesses may need a cash injection for a number of reasons related to the Covid-19 coronavirus, incuding but not limited to:

Supply chain disruption

Lower productivity from lower staffing levels

The cost of increased statuatory sick pay (SSP)

Loss of trade due to restrictive measures and consumer confidence

How business finance helps

Business loans help businesses to manage their cashflow whilst economic conditions fluctuate, until they can return to a position of greater stability. Our business loans are available from £10k to £500k and can be repaid between 1 and 5 years, with no early repayment charges.

How business loans work

Start by completing a quick online application giving us details about you and your businesses. We then search for the right loan based on your criteria and business performance.

Once your loan is approved, the funds could be in your account the very same day. You then make the agreed repayments every month. You can even make early repayments to reduce the amount of interest you pay and the overall cost of the loan, with no extra charges.

What can business loans be used for?

Business loans can be used for a number of purposes to help ease the financial burden during the Coronavirus outbreak.

Funding orders

Cash flow

Expansion

VAT or tax bills

Working capital

Stock

Machinery and equipment

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