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What Does The CBILS Change Mean For You?

Posted 2 years ago

What Does The CBILS Change Mean For You?
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A change in the lending rules governing the Coronavirus Business Interruption Loan Scheme could mean that small businesses previously refused a loan are now able to secure access to vital funding. 

Businesses that had less than 50 staff and turned-over less than £9m per year that previously failed the “undertakings in difficulty” tests as set by the European Union for businesses will no longer be considered in this category. However, businesses with a turnover of above £9m or above 50 employees will still be subject to the rules. 

Previously, a business was classified as such if by deducting losses from its reserves it was left with a negative amount that was greater than half of its share capital. If a small business was categorised this way, it was barred from accessing CBILS. 

The British Business Bank has now changed the provisions of the Coronavirus Business Interruption Loan Scheme to ensure that SMEs do not miss out on funds. 

In a statement, the BBB said: “From 30 July lenders may now be able to offer CBILS to businesses who had previously been unable to access CBILS.”

The changes will undoubtedly come as positive news for many businesses who have struggled to access funding. As has been reported, UK banks have been weary of lending to SMEs despite the government making billions of pounds available.

So far, just half of coronavirus loan applications under CBILS have been approved, with lending totalling £11.9bn. This is in stark contrast to over 1 million businesses who have received a total of £31.7bn of Bounce Back Loans up to £50,000. 

The Federation of Small Businesses has encouraged banks to inform those SMEs who were originally rejected on EU state aid grounds to reapply. 

“Those who have been turned down for a CBILS facility should be actively encouraged to apply again,” the FSB’s policy and advocacy chairman Martin McTague said.

“It’s good to see that these much-needed adjustments to state aid rules have fed through to the CBILS swiftly. A lot of ultimately successful firms are heavily geared or loss-making in their early years. It’s vital that these kinds of firms are not left stranded by banks at this incredibly difficult time. The BBB and accredited lenders now need to work closely to make customers aware of this change.”

Commenting on the news, CEO of Nextfin, Sacha Bright said: “in effect, these changes are making government-guaranteed loans available for companies that were close to operating in an insolvent way. 

“If your business is below 50 employees and £9m turnover and you’ve been denied a loan, I would recommend you reapply.”

Authors: Sacha Bright & Oliver Murphy


To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed. Nextfin is not liable for any damages arising from the use of or inability to use this site or any material contained in it, or from any action taken as a result of using the site. 

Tagged: sme alternative finance raising funds equity crowdfunding cbils news coronavirus entrepreneur

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