CORPORATE / FINANCE

Access to Emergency Finance - Coronavirus Business Interuption Loan Scheme (CBILS)

The terms and practical requirements of the coronavirus business interruption loan scheme should become clear over the next few days, with the major local banks now either accredited or close to accreditation.  Most SMEs in Northern Ireland will meet the eligibility criteria set out by the British Business Bank (e.g. <£45m p/a turnover, >50% of turnover from trading activity) so access to support will largely be determined by the quality and accuracy of information you can collate and present to your lender.

It is probably safe to assume that rebanking will be extremely difficult in the current climate and within the timeframes needed to make the additional support meaningful, so the first port of call in the vast majority of cases will be your existing bank relationship manager. The support may ultimately come in the form of traditional lending, rather than via CBILS, but either way, to improve the chance of a “quick yes”, a few key points to consider (with advice/assisting from your financial/legal teams where appropriate) are as follows:

 

  1. Cashflow - prepare a realistic cashflow forecast, to allow your RM to properly assess the level of support needed and the likely period.  Factor in VAT holidays, rates deferments, and measures in relation to wage costs.
  2. Creditors - any reductions or additional time that can be obtained from trade creditors will be helpful.  
  3. Other Lenders - if your finance arrangements involve multiple lenders, then where your main bank is being asked to approve a break in capital/interest repayments, they will undoubtedly want to see that all other lenders are matching those terms.
  4. Directors/Shareholders/Partners - the Bank may want to see that directors/shareholders/partners in the business are “sharing the pain”, i.e. foregoing a portion of salaries or drawings, and pausing any planned dividends.
  5. Staff costs - all available measures should be looked at to reduce staff costs during the period where cashflow is likely to be hit hardest, including temporary salary reductions, bonus deferrals, redundancies, “furloughing” (via the Coronavirus Job Retention Scheme).  

Please do get in touch with a member of our team if you need advice, assistance, or just a sounding board re next steps.

 

 

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