In his last column, Lending Partnerships Manager Mike Stanley urged businesses to review their finance facilities – as switching can save you serious money.
This week, he’s looking at your lending options again, and more specifically the second wave of financial hurdles business owners may now be facing.
- What if you were rejected for CBILS and took a lesser BBLS but now it’s too small?
- What if you have a CBILS but that’s proving not enough now either?
- What if you’ve been rejected for both but still desperately need cash?
Here, he looks at a range of different scenarios and shares solutions to help you.
“Over the last few weeks we have seen non-essential shops open their doors once again. And on the 4 July, we will go one step further, with restaurants and bars reopening.
“Life will start to get back to some type of normality.
Trading restrictions and cash pinches
“But, even with doors open, the restrictions of social distancing will mean businesses won’t be able to trade at full capacity, potentially putting more strain on what can often be tight margins at the best of times.
“My girlfriend runs a pub, and as we should have been watching the Euros right now, she would normally attract between 150-200 people at peak times. With the restrictions of only allowing seated customers, her current max capacity will stand at around 50. This will have a huge impact on money coming into the business and many other businesses will feel this pinch, meaning they are still likely to have a rocky road ahead.
“To date, over £40bn has been lent as part of the government-backed Bounce Back Loans (BBLS) and Coronavirus Business Interruption Loan Scheme (CBILS). BBLS has been responsible for over £28bn, proving the more popular option currently for business owners. While CBILS has lent out over £10.5bn.
A second wave of challenges for businesses
“This has been vital for businesses that have had their doors closed during lockdown. But I feel many businesses are about to feel the second wave of challenges. You may have found yourself in one of the following scenarios and if you have, I hope I can give some insights as to what is available to help you through the next challenge.
Loan declined outright
“You may have been outright declined for a CBILS and/or BBLS loan, meaning you have not had a cash injection to help the business and likely have had to rely on the government furlough scheme to help you cover a lot of the cost.
CBILS declined and only smaller BBLS approved
“You may have been declined initially for a CBILS loan and then looked for a BBLS, as approval rates on the BBLS scheme were much higher. In doing this, you have likely taken less than what you needed to make you feel comfortable over the coming months.
CBILS approved but not the amount you needed
“You may have taken a CBILS loan but again may not have been approved for as much as you needed.
“So, if you fall into any of these categories, there are options for you to consider.
Exploring your funding options
“Since the launch of CBILS and the later addition of BBLS, there have been many more lenders accredited to the scheme. Each lender has their own criteria so even if you were declined by your bank, you could still have a chance of being approved elsewhere by one of the alternative lenders on the accredited list of CBILS lenders.
“You may have taken out a BBLS loan to see you through but now need more money. The good news is you can switch from one scheme to the other. As I said above, with new lenders having different appetites to lend, you may find a lender who can approve you for a CBILS loan. They will settle off your BBLS and provide you with the additional funding. This is naturally subject to each lender approving you, but with more options now available it might be worth looking into.
“Finally, you might have already received CBILS funding into your bank account. But you might feel that due to reduced trade you need more money to see you through these hard times. The good news is that you can have more than one CBILS loan. You may have been approved for the max amount with your bank but that won’t stop you from approaching another accredited lender to apply for an additional CBILS loan. With some alternative lenders having a different approach to lending than your bank, they may actually be able to lend you more than what the bank offered.
“I should add there is no guarantee that just because the bank approved you, alternative lenders will approve you too – but if you are needing extra capital then it is an avenue worth exploring.
“Finally, what if you still haven’t been approved for a government loan at all? Well, you may still be able to try some of the new accredited lenders, but it will come down to the business and your personal circumstances.
“Outside of this many of the accredited lenders do offer funding outside of the government-backed schemes. While it does not come with the same benefits of payment holidays and no personal guarantees, they might still be able to provide vital funding for your business.
“Whenever I speak to business owners, I often ask: “what impact will it have on your business if you aren’t able to raise funding?” Sometimes that can be for growth as well as the current scenarios businesses are facing. So it might be worth paying that little extra for borrowing outside of the current government schemes, if it means you get the money you need into the business.
“The important thing to remember is that there are options available for every eventuality.”