By Sarah Billingham, Key Account Business Development Manager

I appreciate that FX risk management is just one challenge amongst many at the best of times and now more than ever, the focus of FDs, Treasurers and finance teams is likely to be firmly fixed on cashflow.  As a result, you’ll have seen from our other Infinity International blogs and insight pieces, we’re trying to ensure we provide content to our clients on several relevant topics covering a variety of possible concerns.  To do this, we’re drawing on our own experience, client feedback as well as the input from others in our network.

This week our focus has turned to the Government lending scheme for SMEs.  Social media and the press have been awash with articles on the Government Coronavirus Business Interruption Loan Scheme (CBILS) ranging from information provision to comments and updates.  The provision itself seems to be changing almost daily with developments to process as well as product and sometimes it’s difficult to know what to read and where to start!

To try and make sense of it all I wanted to understand the key takeaways that would help in approaching the application process with a lender. There are many active voices on the subject in the papers, financial news feeds and on LinkedIn; one vocal participant in that discussion is Shaw & Co, a Corporate Finance business based in the South West of England.

I spent some time chatting to the team and asked Alexei Garan, their Head of Debt Advisory, to give us his key messages for those clients seeking access to CBILS funding from one of the British Business Bank’s accredited lenders (https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/)

For context; Alexei leads Shaw & Co’s Debt Advisory function and supports clients in a range of sectors including Energy & Renewables, Engineering, FMCG, Healthcare, Human Capital, Leisure, Manufacturing and TMT. Over the last 10 years, he has advised on over £2bn in restructured post crisis client portfolios and arranged over £400m in client funding.

Here’s some of Alexei’s top tips:

  1. Speed – Lenders are clogged up with applications, so expediency may help ensure your company receives the required funding as soon as possible.
  1. Accounts – Any applicant for CBILS needs to present their filed and management accounts, as well as a cashflow projection covering the current crisis, re-emergence, business ramp up and return to normality. If you need to get these generated or tidied, either internally or with the help of external advisors or accountants, please act sooner rather than later as accountants will also only get busier with time.
  1. Security – Lenders will need to explore whether you have any available asset security in the first instance (e.g. discountable invoices, unmortgaged/lowly levered property, plant & machinery assets, stock etc). In the absence of any of those, lenders are likely to seek Personal Guarantees (PGs) from business owners on loans greater than £250k. NB: Principal Private Residences are not permitted as part of eligible security or PGs.
  1. Maximise Relief – Any CBILS applicant should prepare a concise written summary of how it has maximised all other reliefs available as part of the Government’s emergency measures, e.g. Job Retention Scheme, VAT etc. The same goes for seeking payment holidays from landlords and asset-based lenders.
  1. Amount – Think hard about the amount of money you are seeking. Unfortunately, there is currently no guidance as to how long firms should assume Covid-19 continues to interrupt normal life.
  1. Speak to your main bank first – Most High Street Banks are clear in their intention to focus on existing clients first. Capacity allowing, they might consider new customers. However, the recent cuts in the Relationship Manager population across the UK may make this a mere aspiration.
  1. If you get a ‘No’ – A ‘no’ from a high street lender does not mean all is lost. The list of accredited CBILS lenders is over 40-strong, with alternative, challenger, regional and speciality lenders recently joining the scheme. Whilst the product offering and risk appetite of new lenders may be narrower than a Bank’s, they may wish to acquire new clients.
  1. Consider an advisor – Many business owners are short on resource capacity and are desperate to get the CBILS application right first time and with the right lender. Using an advisor who understands the CBILS process and lenders’ requirements could allow you to focus on maximising your own resources as well as reliefs available from other stakeholders and the Government.

It is likely that we will see further amendments to CBILS over time by the Government whilst banks risk appetite may also change. It is also likely that we will see a larger range of financial institutions that will be able to provide CBILS in due course. The key considerations will then become, which lender understands my business needs, how quick is finance turned around and what terms and conditions suit my business best. Like the insurance market, cheaper is not always best, there are lots of factor to consider.

If you have any additional questions surrounding the above, please don’t hesitate to reach out to me and I will assist you in the best way that I can.  If there are any other angles, you’d like input or thoughts on, do feel free to reach out to the team and hopefully between us, and our network we can provide some relevant input.

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