Reviewing your financing for the next 12 months

UK businesses have borrowed £31bn from banks through the government’s coronavirus loan scheme, but the approval rate on its flagship Coronavirus Business Interruption Loans (CBILs) programme is still languishing at around 50 per cent. The bulk of this £31bn has been through the bounce back loan scheme, which has lent out £21.3bn.

With the changes to, what we are calling, ‘phase 2 of furlough’ bringing about higher wages costs for the majority, along with less certainty on demand for products and services, there could be huge cashflow concerns for many businesses in the short term.

Now is the time that businesses will need to review their financing for the next 12 months to ensure their survival.

So, which loan is the best option for your business?

In the table below we compare the differences between the Bounce Back Loans and Coronavirus Business Interruption Loans.

Bounce Back Loans (BBLS)	Coronavirus Business Interruption Loans (CBILS)
Borrow £2,000 to £50,000	Borrow £50,001 to £250,000
Fixed rate of 2.5% per year	Rates between 1.4%-8.9%
Fixed 6-year terms	2 to 5-year terms
Nothing to pay for 12 months	Nothing to pay for 12 months
No upfront or early settlement fee	No upfront or early settlement fee
Fast decisions	Decisions typically within 24 hours

The good news is that the criteria for CBILs has been slightly relaxed and you no longer need to approach your bank first. The speed for applications has also improved with responses within 24 hours from a number of lenders.

We are hearing some good news stories from clients about non traditional lenders such as Close Brothers and Funding Circle.

We have two articles below which go into more detail about the requirements for CBILS and whether applying for a BBLS is the right option for your business.