Covid-19: more lenders accredited for small business loan scheme

Coutts, the Queen’s bankers, and four other lenders have been added to the British Business Bank list of over 40 lenders accredited under the coronavirus business interruption loan scheme (CBILS), designed to provide support for smaller businesses hit by the impact of the pandemic

The four newbies are the Co-operative Bank, Cynergy Bank, OakNorth Bank and Starling Bank, while Coutts is accredited for CBILS as part of its parent RBS Group’s existing accreditation.

In addition, Arkle Finance, Close Brothers and Secure Trust Bank, recently accredited under the Enterprise Finance Guarantee, are now accredited under CBILS.

Following their approval, each lender will be putting in place the operations required to start lending under the scheme and will confirm shortly the dates from which they will be ready to start receiving CBILS applications.

Keith Morgan, CEO, British Business Bank, said: ‘Our accredited lenders have seen an incredible demand for CBILS in the past few weeks, so we are helping to meet that demand and provide even more choice for smaller businesses by approving additional lenders for accreditation to the scheme. These new lenders will be able to deploy vital funding and get additional finance flowing to smaller businesses across the UK as quickly as possible.’

The British Business Bank says more than 80% of the UK’s smaller businesses have a finance relationship with the existing CBILS accredited lenders. However, figures from the latest tracker survey conducted by the British Chambers of Commerce (BCC) show only 2% of respondents reported they had successfully accessed the CBILS this week (double last week’s 1% figure), with 9% of respondents unsuccessful.

Hannah Essex, BCC co-executive director, said: ‘Despite swift and unprecedented support from the government, many firms continue to face a cliff-edge scenario.

‘Cashflow remains a particularly urgent concern for many businesses. The BCC’s Coronavirus Impact Tracker data suggests just over a third of firms have only three months cash in reserve or less.

‘Business communities will welcome news that there are additional lenders able to provide much-needed loans at this challenging time. Extra capacity must now translate into cash getting to the frontline more quickly to prevent jobs and livelihoods from being lost.’

CBILS enables lenders to provide facilities of up to £5m to smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow.

The loan is available on repayment terms of up to six years, with no guarantee fee for access. For overdrafts and invoice finance facilities, terms will be up to three years.

Personal guarantees of any form cannot be taken under the scheme for any facilities below £250,000. For facilities above that amount personal guarantees may still be required, at a lender’s discretion, but 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. A Principal Private Residence (PPR) cannot be taken as security to support a personal guarantee or as security for a CBIL backed facility.

For all facilities, including those over £250,000, CBILS can now support lending to smaller businesses even where a lender considers there to be insufficient security, making more smaller businesses eligible to receive the business interruption payment.

To be eligible for a facility under CBILS, a smaller business must be UK based in its business activity, with turnover of no more than £45m per year; have a borrowing proposal which, were it not for the current pandemic, would be considered viable by the lender; and self-certify that it has been adversely impacted by the coronavirus.

By Pat Sweet

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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