There have been the cancellation of public events, work-at-home directives, and strict self-isolation rules due to the coronavirus pandemic. Many small businesses have also been negatively impacted. But these are the lifeblood of the economy, and they must be protected. The UK government knows this well, which is why they established a financial support program called Coronavirus Business Interruption Loan Scheme or CBILS.
What Is the CBILS?
The Coronavirus Business Interruption Loan Scheme was launched on March 23 to aid different enterprises in applying for various forms of financial assistance so that they can keep their operations going. Qualified businesses can receive loans reaching about £5 million from banks with the first 12 months of the term interest-free. Meanwhile, the government will provide lenders with a guarantee of 80% per loan.
According to the UK government’s CBILS page, only businesses that meet the following criteria are eligible:
- Established in the country
- Reaches a yearly turnover amount of £45 million
- Applicants must also present that their company:
- would be capable of developing if the current situation did not occur
- is greatly affected by the pandemic
After four days, CBILS had received more than 30,000 applications from SMEs. Anticipating a large number of applicants, financial experts predict that it can take between four to six weeks before a request is approved. It may take longer if it has errors or missing documents.
If you’re planning on getting this loan and want a streamlined and successful application, make sure to follow these best practices:
1. Consult with your accountant
Professional accountancy services are essential when it comes to managing your London-based business’s finances right now. Accountants have the expertise to explain to you the pros and cons of CBILS and can advise you on what to do depending on your business’ needs.
2. Stick with your current bank
Banks are, of course, looking after their customers first. If, for example, you currently have a business account with Barclays, lodge your CBILS application through them. If you don’t get approved, you can still apply to other lenders that offer this scheme.
3. Apply only for what you need to offset the effects of coronavirus
Unlike other business loan applications, which business owners tend to use for different purposes within their company, CBILS is meant to be used to tide businesses over during this pandemic. So don’t ask for more than what your cash flow forecasts you’d need to weather this storm. Remember, you’ll be paying for it for years but at a much shorter term than regular business loans.
4. Make sure your application is complete
Probably the most crucial thing to consider is the accuracy of your application. Make sure to include all the information and paperwork the lender requires, including bank statements, annual accounts, and business plans with the cash flow forecast. Then, review the requirements with your accountant before lodging your application.
The need for the financial support this loan scheme will provide is urgent no matter what industry your business is in. Make sure you get the information right the first time so that you can have a better chance of approval and you don’t have to go through the whole process again.