Andrew Rigby, Assistant Manager, Corporate Finance, Grant Thornton Ireland
As we approach the landmark of one year living with various restrictions and lockdowns, Covid-19 continues to cause uncertainty around how we will live our lives in the short-term. For many business owners, this uncertainty will mean that additional funding will be required to support businesses through the on-going period of restrictions.
Government supports available and being widely publicised, are the Bounce Back Loan Scheme (BBLS) for funding up to £50,000 and the Coronavirus Business Interruption Loan Scheme (CBILS) for funding up to £5 million.
For both schemes, the Government will cover any lender-levied fees, meaning that your business can benefit from no upfront borrowing costs. Businesses that avail of the BBLS benefit from having no capital or interest repayments for the first year.
For CBILS loans, businesses will remain liable for any capital repayments in the first year, however, will benefit from the Government covering the first year of interest repayments resulting in lower initial monthly repayments.
While many businesses have availed of one of these schemes, there are eligible businesses that may have a funding requirement and are yet to apply for one of the Government support schemes.
If you are yet to apply for either of the schemes, you should first prepare a detailed cash flow to determine if your business has a funding requirement, and if so, what that funding requirement is. You should then contact your funder to discuss the options available to you and understand what information would be required to support any loan application.
Given the larger amounts that can be borrowed with a CBILS loan, the application process for CBILS is more onerous than for a BBLS loan. The eligibility criteria for CBILS loans includes that the business must have a borrowing proposal which the lender would consider viable were it not for the pandemic.
The information required to demonstrate this viability differs between lenders, however, you should expect at a minimum to provide historic accounts, up-to-date management accounts, and a 12-month forecast.
With the deadline for applications to these schemes being the 31st March 2021, this does not leave much time to ensure that the relevant documentation is in place to support a loan application. While there is expected to be a revised scheme to succeed the CBILS, at the time of writing this article, details of any future scheme have not been published.
Further information about both schemes, including the full eligibility criteria, can be found on the British Business Bank website.
For further information or advice, Andrew Rigby can be contacted at andrew.rigby@ie.gt.com
Grant Thornton (NI) LLP specialises in audit, tax and advisory services.