• James Powell

CBILS Applications – Three Things To Get Right

The Coronavirus Business Interruption Loan Scheme (CBILS) has been a lifeline for many businesses in the UK since the onset of COVID-19, allowing companies to access funding from commercial lenders at a time when cashflow is vital to weathering the current pandemic. However, despite being a Government initiative, the CBILS loans are ultimately commercial loans issued by commercial lenders, which means success depends on getting your application right. Here, Comera Professional offer three tips to help you on your way:

Make sure you’re eligible

Whilst the decision whether to offer a loan is up to the lender, there are certain eligibility criteria that must be fulfilled before an application will be considered. Banks, insurers, and public bodies are ineligible for the scheme, as are companies with a turnover above £45m or whose business activity is not UK-based. Your business must also have been adversely affected by Coronavirus, and the funder will require you to self-certify that this is the case, but not have been classed as a ‘business in difficulty’ at the end of 2019.

Other conditions exist as well, and the British Business Bank (who are administering the scheme) have put together a helpful checklist that can be found on their website. If you find you’re not eligible for the scheme, there may be other funding methods available to you. Comera Professional’s team can help with a free one-hour consultancy session to determine what options you have.

Know what you’re borrowing for

A requirement of receiving funding under the CBILS loan scheme is to have a borrowing proposal, which the lender must consider would be viable if not for the current pandemic. Therefore you need to consider what you intend to use the funding for and how to present your proposal to the lender. Remember, these are still commercial loans and will need repaying, so you need to consider not only how the funding will get your company through the current uncertainty, but also how it will help you be in a position where you’ll be able to afford repayments.

Comera Professional can help by reviewing your proposal with an objective view, providing a fresh perspective and raising the right questions early to ensure your proposal is as robust as it can be.

Make sure your figures are right

All good borrowing proposals need to have the numbers to back them up, in the form of a business forecast that shows your company’s projected future finances. As noted in our second tip, the lender will need to be satisfied that you’ll be able to repay the loan in the future, and this should be demonstrated through your forecasts. Any forecast will come with an element of uncertainty, of course, because nobody can fully predict the future, but you should ensure that the numbers in your proposal are reasonable. If you’re relying on certain assumptions (such as an increase in customer numbers), state what those assumptions are and how you arrived at them. Make sure your numbers are internally consistent, and that you haven’t missed anything out. If you’re preparing a cashflow forecast, for example, have you included non-operational cash outflows such as tax and dividends?

Remember that your forecast will be reviewed by the funder and if anything’s missing, or seems unreasonable, they may decide to deny funding. Comera Professional can review financial forecasts in detail and spot any inconsistencies before the application is submitted, allowing you to make corrections before requesting the funding.