Latest – Coronavirus Business Interruption Loan Scheme

A quick update from our last article…

More information is coming out daily regarding the Coronavirus Business Interruption Loan Scheme (CBILS) offering by different banks, although banks are not yet processing these loans to get ‘cash out of the door’ yet. CIBLS are currently the loan of last resort, as the banks will offer mainstream lending first if they can.

The banks are speaking to their individual customers and tailoring a normal bank offering first, e.g. overdraft, loan or invoice discounting facility.  And only if they are not possible, will they consider a CBILS. You should speak to your existing bank first, as all banks are prioritising existing customers / clients and may not be able to take on new clients at the current time. Most banks are offering loans, but Santander appear to be offering smaller, interest-free overdrafts for existing customers. Banks are still offering repayment holidays for the normal bank offerings.
Most banks are asking for a personal guarantee (PG), even under £250k, but the scheme won’t allow them to take a direct charge over a directors’ personal private residence. This gives directors some comfort, but of course a claim on a PG could lead to bankruptcy, which would still result in the family home probably having to be sold eventually. It does take some of the power away from the bank however.

The good news is that RBS / Natwest have said they won’t require a PG under £250k. There has been some pressure from the press around the requirement for PG’s by the banks so this may change in the next few days and the requirements may be watered down.
Nordens Corporate Finance Division, can help prepare applications to funding bodies on your behalf. It is a useful exercise to get applications in in case your existing provider is unable to help.
Even if your funder is asking for PG’s right now which you do not want to provide, you can always decide later if you wish to pursue it or not, so keep pushing those applications through.

You will need to get your financial information in order, as most banks are currently asking for the following information for applications:

1. Last 3 years full accounts with detailed P&L
2. Last 4 submitted VAT returns (where applicable)
3. Up to date management accounts
4. Aged debtor and creditor lists
5. Confirmation of any outstanding debt (provider, term, repayment)
6. Last 6 months bank statements
7. All directors (and >10% shareholders who are not directors) names, addresses, dates of birth
8. Statement of personal assets, liabilities, income and expenditure from all Directors
9. Paragraph on how Covid is affecting the business
10. Amount required
Remember that any funding received is a loan that will require repayment in the future. You will also need to think about working capital once ‘normality’ returns, as you will have to think about your cash flows and perhaps the normal lag on receipts as clients/customers start to pay you.
If you have any queries, contact us on 02085300750 or email in on