Bite Size Covid Business Help -Which Loan ? Bounce Back or CBILS ?

Who is Eligible?

Broadly speaking: UK businesses impacted by the Coronavirus crisis. You can only apply for one of the 2; so, Businesses are urged to consider which one suits their needs and circumstances best before they apply. A few exclusions apply – see www.Gov.uk for the list of exclusions

What is it?

These are 2 loans aimed at the sub £45m turnover SMEs. Bounce Back is the smaller brother, whilst CBILS packs a lot more firepower. The Gov pays set up fees and the 1st year’s interest charges

Tell me more…

Bounce Back: simple online application process, more likely to be accepted

Max: Lower of 25% of 2019 Turnover or £50k

Costs: No set up fees or interest in year 1. 2.5% pa interest thereafter

Gov guarantees 100% of the loan – no PGs required, but borrower remains liable for the entire loan

CBILS: More complex application process. Provider will assess credit risk profile and offer accordingly

Max: £5m & repayments can be up to 6 years

Costs: No set up fees or interest in year 1. Interest rates will vary depending on risk profile of the business

Gov guarantees 80% of the loan – no PGs required up to £250k loan, but borrower remains liable for the entire loan. Banks are most likely to request security

How do I do this?

Both: Check the British Business Bank’s website for participating lenders. Then go direct to the selected Bank’s website & apply.

For CBILS: Might be easier and quicker if your existing Bank is a participant, but can apply to any one on that list. This is because you will be asked to provide a lot more Financial information in the form of Annual Accounts, Management Accounts, Business Plans & Cash Flow Forecasts

Both are Loans – so need to be paid back unlike the various Grants in our previous blogs. Also remember – the Borrower remains liable for a 100% of the monies borrowed / might be requested to provide PG/ Other security depending on the credit rating and amount borrowed

On the plus side:, there’s no fees (usually 1%+ of the loan) and both are interest free for a year. So well worth looking into if your business needs access to cash