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Kirk Rice Blog

Immediate Financial Assistance For Lockdown – And BeyondWritten on May 7, 2020 by Kirk Rice LLP

We thought it worth putting together a quick note regarding the options you might be able to draw upon in these difficult times. This is on the back of a few conversations we had early this week with some clients and other local businesses, where it became clear they did not know about the Bounce Back Loans introduced on Monday 4 May.

We have made sure our website carries the latest government guidance, and our commentaries on this, in one easily-navigatable COVID-19 HUB. In particular, for our SME clients, I’d like to ensure you are fully aware of the Bounce Back Loan scheme (BBLS) and the Coronavirus Business Interruption Loan Scheme (CBILS).

As I have given the links above, I will not repeat much of the detail here, but there are some points worth being clear on. BBLS is new this week, aimed at small businesses needing to borrow up to £50,000, with comparatively little ‘effort’ required in the way of application; CBILS is more akin to a normal commercial loan application but should be easier to obtain for businesses that would otherwise struggle to meet lending requirements. Both schemes are underwritten by the government (100% for BBLS, 80% for CBILS).

BBLS applications can be made online now. With CBILS, most banks are still busy making sure their existing client base is able to make use of these schemes, and keeping up with demand has been a struggle for some. Now that the initial rush of applications is over, however, banks should be ‘open for business’ with fresh applications, although I would stress that your existing banks should still be your first port of call. I was able to speak to one of NatWest Bank’s senior managers, Anthony Holt, recently who commented that their clients had been making good use of these schemes. It had been interesting to note that applications were much easier to deal with when applicants were clear about the amounts required, and the reasons for borrowing, instead of just asking for the maximum allowed. Remember, this is still a loan application, and the lending bank still needs to ascertain (for the benefit of the taxpayer, if no-one else!) that the loan is ultimately repayable. He also commented that a lot of applicants had made initial loan applications with certain assumptions about the resumption of trading, or the end of lockdown – often without a ‘plan B’. Clearly, if cashflow planning is fundamental to ongoing business, the banks will want to try to help make sure you have considered enough scenarios and that your facility is of the correct level.

A company making use of these schemes can only use one of them, although an original BBLS loan can be transferred into a CBILS (and feasibly vice-versa if that should make sense to do so). Anthony also pointed out that whilst CBILS rules had specifically ruled out using the loans to refinance existing funding, BBLS can be used to refinance existing debt – a very attractive proposition for many.

If you would like to discuss your own business situation please call 01344 875000 or email info@kirkrice.co.uk.