Thanks to social distancing restrictions to minimise the spread of the coronavirus, many businesses deemed non-essential have been forced to close. To help limit the damage this period could cause, the Government has announced several support schemes. One of these lifelines is the Coronavirus Business Interruption Loan Scheme (CBILS); in which businesses can access loans from certified funders to help ease their coronavirus-related cash flow problems. However, there could be scenarios where this may not be appropriate for your circumstances, or you might find your business being rejected for government finance.
Why wouldn’t my business qualify for CBILS?
While CBILS might sound like an ideal solution for businesses struggling with coronavirus-related debt, in order to qualify for the finance, your business needs to meet certain criteria. Failing to meet said criteria could result in the rejection of your business’ application.
The business was insolvent before the coronavirus
An essential part of the acceptance criteria for CBILS is your business must be able to prove that it is profitable, and able to demonstrate the Government finance would allow the business to trade out of its difficulties. In other words; it must have been in a solvent state, and able to cover its liabilities before the coronavirus made its impact. This restriction stops companies who weren’t viable before the lockdown from applying for support.
Your business’ sector
CBILS is designed so most businesses will be able to access it, regardless of their sector or industry. That said, there are a few exceptions that aren’t eligible for financial support. These include; banks and building societies, insurers, organisations in the public sector, trade unions and religious organisations.
What are my alternatives?
If you don’t meet the criteria to qualify for CBILS, there are alternatives that will allow you to ease your cash flow problems and help you get through these challenging times.
While you may have been rejected for CBILS, there is still a multitude of alternative financial solutions. One of these is commercial finance; an encompassing term for several financial options that allow companies to make essential purchases and investments without impacting their cash flow. Among these options, is asset finance, where finance is provided, secured against a company asset and paid back over a period of time.
Invoice finance is designed for companies struggling with late-paying clients, which can have a hugely detrimental impact on your cash flow. Finance is lent based against the value of your unpaid invoices. There are several variations on invoice finance, including invoice discounting and invoice factoring, which can provide fast cash injections to cover your unpaid invoices.
If your company’s financial problems are of such a level that it’s insolvent and unable to pay its liabilities when they fall due, there are several insolvency options available. Depending on how serious a situation your company is in, these options can either help the company repay a portion of its debts or allow you to close it in an orderly fashion while ensuring creditors get more of a return than if they apply to wind-up the company.
All insolvency procedures must be carried out by a licensed insolvency practitioner.
What we can do for you
While the Coronavirus Business Interruption Loan Scheme (CBILS) can assist companies struggling with the effects the lockdown may be having on their cash flow, businesses must meet the criteria to qualify. If your application for coronavirus-related finance is rejected, there are alternative finance options available. This could be in the form of an insolvency procedure from a licensed insolvency practitioner or commercial finance from a certified lender; either against the value of your outstanding invoices or a company asset.
If you’ve been rejected for one of the Government’s coronavirus finance schemes, or your company risks becoming insolvent, either because of the pandemic, or from trouble originating beforehand, speak to us today for free, regulated and impartial advice, and we will point you in the right direction.