As the impact of COVID-19 continues to be felt across the UK and businesses face difficult times, getting access to the information you need can feel like a huge challenge. At Swoop, we are working hard to ensure that our community has access to all the key information that can help support your business’ financial health during this challenging period.
Why not start by watching our very own Andrea Reynolds offer guidance on how to get CBILS ready?
UMi & Swoop
Protecting your business’ financial health
Futrli & Swoop
CBILS: Navigating the application process
We’ve also been making a note of some of the most commonly asked questions raised during these sessions so we can provide you with the answers you need (answers are correct as of today):
1. What are the basic eligibility criteria for the scheme?
To be eligible to submit a CBILS application, you will need to:
- Be a UK-based SME that has been trading for over 1 year, with an annual turnover of up to £45m
- Be looking to borrow up to a maximum of £5m
- Be a business that generates more than 50% of its turnover from trading activity
- Belong to an eligible sector, e.g. retail
- Show that the CBILS-backed facility will be used primarily to support trading in the UK
2. Does the application process take time and where should I start?
We recommend that you register on Swoop first, understand the process fully and then take time to prepare the necessary information, e.g. your cashflow forecast. Remember to also look at what else you could be doing to manage your cashflow:
- Look at your next HMRC payments
- Review the options laid out in the Job Retention scheme with your employees
- Check funding options still available at your local Growth Hub
- Identify and make savings on expenditure like utilities and banking
- Call your insurance company to discuss your options
3. Do I need to be rejected by a lender first before applying for CBILS?
You now don’t have to be disqualified from commercial lending in order to access CBILS.
4. Is there a time limit to apply for the scheme?
There is no time limit or set amount of time for the government to operate this scheme. This is simply a re-hash of a scheme that has been in existence for over two decades. The only difference is that the government is paying the interest payments for the first 12 months and businesses do not have to pay a fee to the government for being the 80% guarantor.
5. How is ‘viable’ being defined by lenders?
Lenders will be asking, ‘Did the business have positive EBITDA before Dec 2019?’. If the answer is yes, then the business will be seen as viable.
6. Do lenders require personal guarantees for these loans?
Lenders will no longer ask for PGs (personal guarantees) for loans of under £250,000. For facilities above £250,000, personal guarantees may be taken, excluding the borrower’s Principal Private Residence, and capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.
7. What about the interest rates lenders will be offering after the 12 months?
The government has said that all lenders must be transparent on this. Interest rates are likely to be between 2 – 6% for banks and 3 – 9% for non-banks.
8. Are there any limits on the use of funds within the company?
Yes, it must be shown to safeguard jobs and the business so that you can re-start the business when the crisis is over.
9. What if my business hasn’t been profitable for 2 years, or a start-up which has been trading for less than a year?
Then it won’t be eligible for the CBILS application, but it may be eligible for other forms of finance. Swoop funding will give you the answers on what kind of funding you might be eligible for, e.g. a start-up loan.
10. Is CBILS the only option?
No, all loans, grants and investment options will be shown on the Swoop platform, as well as savings across utilities, banking and FX.
If you haven’t already, you can register on Swoop for free to gain access to relevant funding solutions and make immediate savings on your everyday spending.