CBILS demand continues businesses in credit stand-off | moneyfacts.co.uk

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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 11/06/2020

Lending to businesses has now reached £35 billion to over 830,000 small businesses under the various Coronavirus Business Loans schemes. However, this is not improving business confidence with one in four small businesses stating they will not survive into 2021 according to research from business lender iwocaPay.
The research identifies a trade credit stand-off between businesses in the supply chain, with customers extending credit terms and delaying payments and suppliers restricting and reducing credit terms. Twice as many suppliers are now owed between £20,000 to £50,000 compared to last year and 41% have asked their suppliers to extend payment terms compared to 27% last year. While 34% of suppliers have reduced payment terms as they seek to reduce the risks of non-payment and improve cashflows.

Mike Luxford, founder of MLCS, a cloud-based internet phone system provider (VoIP) added: “The first thing I thought when this all started [the pandemic] was, we won’t get paid. When you're a small business, that’s when the issues start. And it’s a knock-on effect - if I’m not getting paid, it clogs up my credit accounts which means I can’t take on more contracts. I try to have some savings around so it’s not literally hand-to-mouth because if a silly little payment trips you up, you lose all your credibility. For that reason, if someone wants extended terms or huge amounts of credit for no reason, I tend to walk away. Otherwise it becomes a daft juggling game.”

Those businesses that face difficulties with their cashflow due to the Coronavirus pandemic can apply to the Coronavirus Business Interruption Loans Scheme for a business loan, asset finance or invoice finance. Invoice finance can be used to increase the speed of invoice payments, removing the risks of credit terms given to customers.

50% of CBILS approved so far

The latest lending statistics from HM Treasury for Bounce Back loans and the Coronavirus Business Interruption Loans Scheme (CBILS) show that approval rates for Bounce Back loans have increased to 81% while the Coronavirus Business Interruption Loans Scheme (CBILS) rate has remained static at 51%. This means half of business loan applications under the scheme will be rejected, business looking for help to improve their chances of success should consider a CBILS broker. A broker can identify those lenders accepting and processing CBILS applications who meet the credit requirements and situation of different types of small business.
The British Business Bank that manages the Coronavirus business lending schemes on behalf of the UK Government continues to announce the addition of more lenders. The latest new include Paragon Bank for Bounce Back loans and Growth Lending, in Fund, Invocap, NEL Fund Managers, Triple Point, Greensill, Metro Bank, OakNorth Bank and Secure Trust Bank for CBILS or CLBILS.
Businesses with less than £45 million turnover can check their eligibility and find out how to apply in our CBILS guide.


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