UK businesses now have only a few more weeks to apply for funding through the Coronavirus Business Interruption Loan Scheme (CBILS). With time running out, we’re encouraging accountants to consider how their clients can capitalise on this government-backed funding before it’s too late.

While businesses may not have an immediate need for finance, once secured, CBILS funding can provide support well into 2021 and beyond. With no interest or fees in the first 12 months, it’s a great option for businesses that need a working capital boost. Especially those seeing demand for their products and services returning to normal – and beyond.

Here we’ll explain more about the scheme and how you can proactively help clients understand their CBILS options and support them with their application before the fast-approaching deadline.

What is the CBILS?

The CBILS was launched to support small and medium-sized businesses losing revenue or experiencing cash flow disruptions due to the pandemic. UK businesses with an annual turnover of up to £45 million can apply for between £50,001 and £5 million in government-backed loans, asset finance, overdrafts and invoice finance before 30 September. Accredited CBILS lenders, like MarketFinance, then have until 30 November to process applications.

According to CBILS figures published by UK Finance on 18 August, lenders have approved £13.7 billion worth of funding to 60,400 companies impacted by COVID-19.

Choosing a CBILS funding option

Before making a recommendation to your clients, it’s important to understand the options available and which businesses they may be applicable to. At MarketFinance, we’re accredited to provide two different kinds of CBILS funding. We offer invoice-backed revolving credit facilities and straight up term loans. Here’s a quick look at what each of these solutions has to offer.

CBILS revolving credit facilities

For most growing businesses, invoices issued for completed work are their biggest asset. But with COVID-19 disruptions, there’s a high chance of being paid late, leaving businesses without cash when they need it.

MarketFinance offers a CBILS revolving credit facility, allowing businesses to draw down on the value of outstanding invoices. Once the invoices are paid, the credit balance is topped back up for the next time your client needs the cash.

This option is great for businesses looking to trade their way back to the new normal. It’s a good fit for those that want a flexible way to bridge gaps in cash flow, accessing funds as and when they need to. As an added bonus, fees and interest are covered by the government for the first 12 months.

One of our customers, Chris Sharp, Chairman of Video Partners Limited, founded a free entertainment service where viewers watch movies and TV shows online for free. The business didn’t meet the lending criteria of their bank, so was referred to MarketFinance where they were approved for a £350,000 CBILS revolving credit facility.

“Our revenue is driven by advertising, so we saw first hand how the recent crisis affected advertising spend in our sector,” says Chris. But MarketFinance’s revolving credit facility gives Video Partners access to the cash they need to keep the business running while awaiting payment from advertisers.

CBILS loans

A CBILS loan is helpful for clients that need a lump sum to kickstart their way back to business as usual. For those that don’t rely on paid invoices to keep cash flow healthy, an instant cash injection could keep the books balanced and help a business get back on track faster.

For example, if your clients are restarting or kicking off new contracts and projects or seeing demand picking up, a CBILS loan can help them access the funds needed to cover upfront costs. This might include purchasing stock, employing and training new staff, or expanding e-commerce facilities to manage online demand.
Businesses still need to pay the loan back in full. However, the government will pay the first 12 months of interest, leaving the business to pay regular instalments on the principal. After the first year, a business’ repayments will include both the interest and the principal.

We offer CBILS loans from £50,001 to £150,000 for 2 to 3 years. We also offer a no-payment option where businesses can choose not to make any repayments for the first 12 months and instead start paying off their loan in year two.

Helping clients with their application

The role of the accountant is key for businesses applying for CBILS funding, especially when it comes to understanding the eligibility requirements and pulling together the required documents. When applying for CBILS funding with MarketFinance, the director of a Limited Company, LLP or PLC registered in the UK must provide:

  • Latest statutory accounts
  • Turnover and net profit for 2019
  • For a CBILS loan: bank statements from 1 November 2019 up until 14 days before submitting the application
  • For a CBILS revolving credit facility: bank statements from the last 3 months up until a maximum of 30 days before submitting the application

Once you’ve identified which of your clients could benefit from a CBILS revolving credit facility or loan, it’s time to work with them to understand whether or not applying for CBILS funding is the right step forward.

If you’re using online accounting software and supplementary cash flow forecasting tools with your clients, you’ll likely be in a good position to determine whether or not to recommend they apply for funding.

Software like Xero includes short term cash flow projections that can provide business owners with a view of their cash position for the next three months. Meanwhile, more complex cash flow forecasting apps like Float, Fluidly and Futrli can help your clients to prepare for various eventualities, and much further into the future. These apps also integrate with their accounting software to predict future cash flow, helping you and your clients make the right decisions well ahead of time.

But keep in mind, the information you get out is only as good as the information that goes in. Making sure your clients have real-time financial data flowing in, and reconciling regularly, will ensure the numbers you’re looking at are accurate. Knowing whether your client can afford to borrow £60,000 or £600,000 could be the difference between that business surviving the coming months, or thriving in years to come.

And don’t forget that while CBILS funding is government-backed, it’s still debt. So defaulting will impact a business’s ability to seek credit in the future. With that in mind, it’s important to ask the tough questions and help your clients to have a clear understanding of sales forecasts and upcoming costs to ensure they’d be able to meet their repayment requirements.

Chris Sharp said Video Partners’ accountant, Kasa Business Services, played a hands-on role in their CBILS application process.

“They were key in helping me prepare documentation for MarketFinance: filing accounts, keeping management accounts up to date and understanding the current government regulations on VAT. It’s a tough market but if you qualify for a CBILS loan and believe that your business can repay the loan, the finance gives some security in these unstable times.”

Could your clients benefit from CBILS funding? Why not speak to them today about their upcoming needs. CBILS applications can be submitted using our online form until midnight on 30 September. For additional support, email accountants@marketfinance.com and we'll be happy to help.