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Ask the expert: How can I get funding if I can’t get a CBILS loan?

Question: I’ve tried to put in an application for a CBILS loan with my bank but I’m still waiting to hear back. I really need access to funds quickly, can I try other lenders and what are my options?

Answer: Michael Stanley, Lender Partnerships Manager at Fluidly, talks through the current funding landscape and answers key questions around getting access to finance right now.

“We are seeing a lot of movement across the lending market. The current list of accredited CBILS providers is being expanded to cope with demand. This is to help push more funds into small businesses but also to get it to them quicker than what is happening currently.

“Across the wider lending market we are seeing some lenders hold off on any new lending, tightening up their criteria and reviewing ongoing applications in more detail. What this means is they may request more financial information or carry out additional due diligence on an individual company’s current plans to cope during Covid-19.

Why aren’t more customers getting funding?

“As great as the CBILS scheme is, the government has made it sound like if you are affected by Covid-19 then you can automatically get a CBILS loan. The challenge for the lenders is to make sure they are lending money to companies who they feel will pay the funds back.

“This means your business needs to show affordability through profit or through its current cashflow. While the government is covering up to 80% of the loan the lenders still have to worry about the additional 20% (although this may change in the coming weeks which could mean we see another shift in the lending market). Currently, this is why we are seeing some lenders stop lending and certainly seeing some lenders tighten their underwriting to ensure customers show good affordability to borrow money in this current tough market.

Check if funding is the best thing for your business

“In the first instance, it’s worth assessing if funding, particularly debt funding, is really the right route to take.

“As a business owner, you will have insight into your business’ cash position. You may have upcoming bills you need to pay. You may have money owed to you which your customer can’t pay which will leave a cashflow problem for wages and other costs.

“Be clear about your position over the coming months and then if you feel you really need funding to help, that would be a good time to start to explore options. It’s easy to get drawn into thinking that you need a loan but you may find with a few adjustments you can make things work.

What does it mean if you get rejected – or haven’t heard back yet because the process is so long?

“If you have been rejected, or have been waiting a long time for a response, there are two options at the moment. You can ask your bank to put you forward for the bank referral scheme. But be aware this may take some time for your bank to authorise given the volume of enquiries they are dealing with at the moment.

“Or you can look at other options in what we refer to as the alternative market. While banks traditionally have some of the best offers in the market, it does mean their criteria is often stricter than anyone else. They may also not offer the solution you are looking for. For example, you may think you want a loan, and they may look to offer an invoice finance facility. The alternative is exactly what it says. An alternative view and a willingness to look at your application in a different light.

“Bear in mind though, many of these lenders will not be covered under the CBILS Scheme. So while they will still have the potential to lend vital funds to your business, they will be more likely to need you to provide a personal guarantee or additional security to secure the funds.

Can you apply for other funding simultaneously?

“I often talk about plan A and plan B. Plan A will normally be your bank. It’s who you do most of your business with. But as previously stated, banks can be stricter and can also take longer to make a decision, as well as asking for more information upfront.

“In a normal market you may wait for a decision from Plan A before looking at Plan B. However, what we are seeing a lot of businesses do at the moment is approach plan A & B at the same time, just to speed up the process and find out all of your options quicker.

“The only thing to bear in mind is that multiple applications could result in multiple credit searches and this could have a damaging effect for any future borrowing needs.

What are alternative lenders offering?

“The alternative market offers a wide range of products so there will be something to suit your needs. It may be a simple business loan, or even a flexible facility to draw down on as and when you need it.

“If you have assets in the business there are companies that can help release capital from them and if you are owed money from customers there are invoice finance lenders that could offer support in this scenario.

“Not only is getting funds important at this time but just as important is getting the right funds. It’s worth speaking to someone to see what is available to you.

“At Fluidly, our app can give you insight into your current cash forecast to help you make an educated decision as to whether funding is right for you. You can build these costs into your planner to ensure you can afford to take on new debt.

“If you decide you want to proceed with getting funding, and want to look at all options, Fluidly works with a wide range of alternative lenders as well as accredited CBILS lenders.”

Find out more about how Fluidly can get you tailored, pre-qualified funding options in just 30 seconds.

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