The government has announced that the Coronavirus Business Interruption Loan Scheme (CBILS) will be extended until 30 November. The chancellor, Rishi Sunak, said that changes to the scheme – originally planned to close at the end of this month – would make it easier for lenders to give businesses more time to repay their loans. The government’s guarantee, which covers 80% of each loan, will be extended from six to ten years.

Previously, businesses had to apply to accredited lenders by 11.59pm on 30 September, with providers given until 30 November to supply funding. Companies must now register their interest in a loan by 30 November, and lenders are required to fund any successful applications by 31 December.

Sunak also extended the application deadlines for the government’s other loan schemes until 30 November, unveiling a new “pay as you grow” approach to the Bounce Back Loan Scheme (BBLS). These loans may now be extended from six to ten years, nearly halving average monthly repayments. Businesses can also make interest-only repayments or apply to suspend their repayments for up to six months, without affecting their credit rating.

A raft of new proposals includes:

• the introduction of a Job Support Scheme, active for six months from November, to subsidise the wages of employees working reduced hours after the furlough scheme ends in October;

• permitting businesses to spread their VAT bills over 11 smaller repayments, rather than having to find a large lump sum next March;

• extending the temporary 5% rate of VAT for the hospitality and tourism sectors until 31 March;

• and a new loan guarantee scheme to replace the government’s existing initiatives (it is now beginning to work on this scheme, which it plans to introduce in January).

Practically speaking, the definition of “applying before the deadline” for a government-backed loan varies between providers (perhaps emphasising the wisdom of submitting your information in good time). BOOST&Co’s partner Growth Lending, which is an accredited lender for CBILS and offers three products under the scheme (term loans, invoice financing and revolving credit facilities), asks that businesses complete its online application form before the deadline.

CBILS – the success rate so far

The scheme was launched in March, shortly after the coronavirus pandemic began, with the aim of helping companies that have suffered disruption to their cash flow as a result of Covid-19. It provides loans of up to £5m through more than 40 accredited lenders. The government guarantees 80% of each loan and pays all of the fees and interest for the first 12 months.

The most recent statistics on CBILS, covering the period to 20 September, show that the approval rate for loans is just under 47%. Around 66,500 of just over 142,000 applications have been approved, with lenders providing £15.5bn in funding to UK SMEs.

For comparison, the Coronavirus Large Business Interruption Loan Scheme (CLBILS) has a higher approval rate, although the pool of applicants is much smaller (57% of 992 applications were successful over the same period). More than £38bn has been provided under the Bounce Back Loan Scheme (BBILS), but there has been controversy around the initiative, which offers loans of up to £50,000, “no questions asked”, and is reported to have attracted significant fraud.

(For more details on the differences between CBILS, CLBILS and BBILS – and which scheme could be right for your business – read this article by our Bristol-based principal Sinead Johnson.)

Working capital, M&A… if you’re ready to grow, apply today

BOOST&Co’s partner Growth Lending is an accredited lender for CBILS – and these loans can be used in ways you may not expect. Although the initiative was created to help companies recover from the economic turmoil caused by the pandemic, the funds can also be used for growth, explains principal Ryan Sorby, the head of BOOST&Co’s Manchester office.

“Business owners may have discounted CBILS because they thought the scheme was only intended to cover the immediate impact of Covid-19, but it does provide a huge opportunity for firms that still want to grow,” he says. “If that means making an acquisition or investing in people, for the benefit of both your company and the UK, then that’s absolutely what the scheme can be used for.”

In fact, we are actively encouraging businesses with ambitious growth strategies to consider using CBILS loans to implement their plans. This type of funding can be used to support a wide variety of goals, but it is particularly well suited to mergers and acquisitions, an area in which activity is beginning to bounce back, as BOOST&Co’s London-based principal Joanna Scott explains here.

Smaller lenders can provide larger amounts

Companies seeking CBILS funding may benefit from applying to an alternative lender such as Growth Lending, which was founded to support UK SMEs where traditional banks could not. The platform specialises in working with innovative, fast-growing firms, and its swift, agile approach to funding offers more flexibility than traditional banks, which were criticised after the launch of CBILS for being initially slow to lend.

“If businesses are seeking loans to mitigate the impact of Covid-19, plus additional funding to continue to implement their growth strategies, they need a larger amount than mainstream lenders have been willing to provide,” Sorby says. “Those lenders have a role, but we can provide a level of funding that helps SMEs to deliver fantastic plans for growth.”

So, now you have an additional two months to apply for a CBILS loan, think about whether this funding could help your firm to adapt to the “new normal” and take its next steps. Growth Lending is keen to hear from any companies that are looking for funding to help them not just survive, but also thrive.

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