Here we'll share latest Governments Guidance, news from our good friends at Medialease - supportive PSA members for many years - and your hints and tips from the application coal face.
The Medialease take:
CBILS Loan Scheme – REVISED to suit the Small Business
Medialease are working very hard with a number of Banks and Leasing Providers - who are affiliated with the CBILS scheme and have portal access to the scheme – and will be announcing hopefully next week how the SME clients can apply with the help of Medialease who will be looking to provide guidance and putting your application in through the most suitable funder.
In the revamped version, access to the scheme has been opened up to those smaller businesses that would have previously met the requirements for a commercial facility but would not have been eligible for CBILS. This significantly increases the number of businesses eligible for the scheme.
The government is also stopping lenders from requesting personal guarantees for loans under £250,000 and making operational changes to speed up lending approvals.
For loans of more than £250,000, personal guarantees will be limited to 20 per cent of any amount outstanding on the CBILS lending after any other recoveries from business assets. A principal private residence cannot be taken as security to support a personal guarantee or as security for a coronavirus business interruption loan-backed facility.
The scheme provides the lender with a government-backed, 80 per cent guarantee against the outstanding facility balance.
Alongside changes to the original scheme, a new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will ensure that more companies are able to benefit from government-backed support during this difficult time.
It will provide a government guarantee of 80 per cent to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m. Loans backed by a guarantee under CBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.
Also, from a fellow member after discussion on application tips with their bank.
We have been in lengthy conversations with our bank manager for a couple of weeks now, we started the process before the details where even released to the banks based on his predictions of what would be required, and I must say our bank manager has been most helpful and explained each step/detail to me along the way.
What our bank manager has been saying to me is, the businesses that are being rejected aren’t meeting the governments guidelines that the banks have to following. These are, that the business must demonstrate that they are viable, can make the repayments and are doing all they can to reduce cost in the meantime. Each application need to supply a full cashflow, business plan going forward (after the pandemic is over) explanations on the impact this has had on the business and full details of the measures put into place by the directors to minimise outgoings.
The loans are provided as a survival method and not to continue all payments as if the business is still in operation. The directors must demonstrate they have explored all avenues to reduce the overheads during the downtime including what they are paying themselves. In his experience of rejection so far the directors don’t seem to understand the importance of all this information and in some cases can’t provide. For the larger applications the bank have to submit a 12 page report detailing every aspect of the business so the more information provided the better.
If it helps we provided the bank with the following:-
- Full extensive detailed cashflow which mirrored what the bank activity will be daily from not to end of August (assuming the industry is still not up and running by then)
- List of Creditors along with narrative as to which ones we wanted to ensure where paid and why (obviously all but include reasons why these suppliers are important to the continuing operations)
- Company Bio/CV showing a full list of our clients
- Report explaining all measures taken to reduce overheads and fixed cost
- A list of all cancelled, postponed jobs
- A list of all future confirmed and probable work
- Last full years accounts, ours ran to December but if the year end was further away we would have had to provide more recent management accounts
After supplying all the above he came back to me with a list of questions to make sure we had considered all avenues of cost saving.