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CBILS: Time to give businesses a fighting chance



COVID-19 has had a deep and lasting impact for many businesses, a number of whom are currently fighting for survival. But help is finally here, right? In the red corner are the various lenders proudly displaying their Coronavirus Business Interruption Loan Scheme accreditations, and giving reassuring signs that they are very much open for business.

In the blue corner sits the lengthy queue of small business owners who are praying for a financial lifeline that will provide hope and save jobs for the future. The majority are already exhausted and have little fight left to give. Some have already commenced with redundancies as the furlough period draws to a close.

And in the middle of the two are the intermediaries. One look at the lenders’ CBILS criteria, followed by a conversation with their broker managers, and all appears rosy. Then one look at the faltering business owner and we all know what is likely to come in round one...


COVID-19 enters the ring

At the beginning of the year, I had already noticed a drop in approvals from many of the unsecured lenders. Maybe the rumours that were circulating about another recession looming caused a change in lending appetites? Whatever was going on, in my experience, both unsecured and secured lending approvals were in decline.

Experienced intermediaries who were suitably equipped with the various skill-sets, and had established lender relationships, were battling hard and finding a way forward regardless. But then the world was hit by a pandemic, and no-one has any idea when life will return to near normality again.

While Boris and Rishi may have rushed to roll out various government aid packages, it is yet to be seen whether enough has been done to get the country through this unprecedented period. I fear not. For some, the combination of packages provided a way through those first few horrible months but, as described in my article published back in April entitled Storm before the tsunami, that monster wave is now in sight.

Around three million UK taxpayers and firms are reported to have fallen through the gaps of the various government aid provisions, and this is despite their earlier assurances that they would do whatever it took to protect our economy.

So, what is left in terms of the attitude to lend for those with or without CBILS accreditations?

Guards remain up

With regard to those lenders offering CBILS, I believe that the majority want to do all they can to support businesses who are searching for a way forward. However, there appears to be lack of common sense and forward-thinking credit acumen at present, despite it being a time when interest remains low and government guarantees have been given. For example, I had a CBILS application with a lender that was originally declined because they are an existing and non-defaulting customer. They had not even taken a repayment holiday! Pre-lockdown, the business was flying and had recorded its best set of financials since trading commenced 18 years ago. Despite a handful of recent redundancies, the business has remained solvent throughout.

Following an e-mail to the lender’s CEO and operations director, common sense prevailed. Then, following a time-consuming period to provide the piles of information requested, we were informed we must wait between one and two weeks for a decision. Thankfully, an approval was granted some two weeks later, but the levels of emotion and anxiety caused were beyond anything I had experienced since the banks went into self-destruct back in 2008.

Unfortunately, those businesses that did meet the clear criteria given by government but still did not get CBILS support, then sadly, they will fall into the already enormous pile of declines that are lying punch drunk on the canvas.


It’s a knockout

Depending on what you read (and believe), around 60,500 businesses have been approved for the CBILS so far. And I wonder how many of these businesses had either had existing loans that the lenders have now converted to CBILS, or have balance sheets that a majority of business owners can only dream of.

If small firms truly are seen as being the backbone of the UK economy, then surely they deserve more? These small, hardworking and dedicated businesses will, without a doubt, be ready to fight on and prosper again soon.

Sadly, unless there are some significant changes with regard to either the lending landscape or further government support by the end of October, then I fear that a choice to throw the towel in may be the only option.

To provide some context, if more isn’t done soon, then circa 800,000 firms employing more than three million people could fail within the next 12 months. And that could be the final, knockout punch the UK simply cannot recover from for many years to come.

Regardless of my feelings and those of my peers, the reality is, the government is going to be left with an enormous bill for this crisis unless more can be done and quickly.


David Grosse, Managing Director,