Some good news – CBILS extended to 2021

Amidst all the doom, gloom and uncertainty, we always try and focus (pardon the pun) on the positive.

As I’m sure many of you are aware, at the end of September the decision was made to extend the application deadline for the Coronavirus Business Interruption Loan Scheme (CBILS) to 30 November 2020. Therefore we wanted to ensure that our customers understood the key points of the scheme and how it can potentially help.

CBILS FURTHER EXTENDED – APPLY BY 31 JANUARY 2021

Following the announcement on 2 November of a further national lockdown for 4 weeks in England, the Chancellor has again extended the scheme.

You will now have until 31 January 2021 for your application to be made to the lender.

A lender can provide a business up to £5 million in the form of:

  • asset finance
  • term loans
  • overdrafts
  • invoice finance

CBILS gives the lender a government-backed guarantee for the loan repayments to encourage more lending.

Whilst your own bank may be your first thought, Focus can access CBILS schemes that you would be unable to access directly, as they are only available through preferred brokers. We can consider applications for asset finance and loans on this basis.

The key features of a CBILS asset finance agreement are as follows:

  • Business Interruption Payment – the government pays the first 12 months of interest payments in addition to any lender-levied charges
  • Payment Holidays – certain funders are offering a 12 month capital repayment holiday
  • Amount to be funded – anything between £5000 and £5 million can be considered
  • Term Length – currently the maximum term offered is 72 months

Under the scheme, lenders will not take personal guarantees of any form for facilities below £250,000.

For facilities above £250,000, personal guarantees may still be required, at a lender’s discretion, but:

they exclude the Principal Private Residence (PPR), and

recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

Now more than ever, cash is vital to the survival of so many businesses, but with the end of the pandemic unknown we can’t just wait for this all to pass, so as much as possible it must be business as usual.

Access to the scheme has now been opened up to smaller businesses facing cashflow difficulties who previously would not have been eligible for CBILS, because they met the requirements for a standard commercial facility.

You can download the British Business Bank’s CBILS checklist below, which should help you define whether you are eligible for this scheme.

You can also find out about other loan schemes on the British Business Bank website.

If you are thinking about acquiring assets for your business, another consideration is the Annual Investment Allowance (AIA). On 1 January 2021 this will reduce to £200,000, so if you are likely to be exceeding this you should consider speaking to you accountant about making any purchases before then.

If cashflow does not currently permit this, a hire purchase agreement (CBILS or otherwise) could help.

We are of course happy to discuss any questions you may have, so just give us a call!


PLEASE NOTE

The lender has the authority to decide whether to offer you finance.

As with any other commercial transaction, the borrower is always responsible for repayment of the full value of any facility supported by CBILS.

The guarantee is to the lender, and not the business.

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