How to access funding through the Coronavirus Business Interruption Loan Scheme (CBILS)

Since the announcement and formal launch of CBILS we have seen very public teething issues and a shift in guidance and the rules for those businesses seeking support through the scheme.

Statistics from UK Finance following two working weeks since the release of the scheme show that less than 0.8% of enquiries have been successful. The recent softening of the scheme rules are intended to improve this statistic albeit applicants must ensure they present a robust business case as they approach their funders, and those with multiple financial stakeholders and financial stakeholders who do not appear on the BBB panel are encouraged to seek external advice.

More details are emerging regarding the detailed criteria which accredited funders will use when evaluating applications for the Coronavirus Business Interruption Loan Scheme (CBILS).

The British Business Bank which is running the scheme (through the 40 accredited lenders) has been clear in its message that the funding is aimed at those businesses which were viable prior to the impact of Covid-19. We have developed a factsheet detailing the individual criteria from each of the banks on the newly introduced Coronavirus Business Interruption Loan Scheme.

It is important to note that the viability of the business will be evaluated primarily through a review of two key areas:

  1. A review of the recent financial performance of the business, by reference to the recent financial statements, and management accounts (prior to Covid-19). We can assist in the preparation of these.
  2. A review of the projected financial performance of the business for FY2020 and FY2021. It is likely that funders will require 2 scenarios:
    i) The projected performance on a “normal” basis, excluding the impact of Covid-19;
    ii) The expected performance based on the impact of Covid-19.

Therefore it is imperative that businesses looking to secure funding ensure that their management information is accurate and up to date.

Secondly businesses will need to prepare detailed financial projections showing the projected profit and loss, balance sheet and cash flow position on a monthly basis.

The Corporate Finance team at MHA Tait Walker is well placed to assist businesses to navigate through these very challenging times. The key areas we can assist include, but are not limited to the following areas:

Financial projections

The team are highly experienced in preparing and reviewing financial projections and business plans (both short and medium/long term) to enable Directors to understand the impact of Covid-19 on their business in the first instance.

We can do this on a ‘light-touch’ basis where the client has a relatively sophisticated finance function and merely needs guidance or on a more involved basis where we compile a detailed financial forecast model for the first time for a business. We adopt an ICAEW approved Flexible, Appropriate, Structured and Transparent (FAST) approach hence our forecast methodology is not just robust but is widely understood and accepted by funders.

Funding

We can utilise our knowledge of the government funding schemes (such as CBILS (Coronavirus Business Interruption Loan Scheme) or CCFF (Covid-19 Corporate Financing Faculty) alongside wider ‘normal’ funding offerings to assist you to understand which funding structures are likely to be relevant to your business.

Government support schemes have captured the headlines, but they remain an application for a business loan and a normal loan application with supporting financials will need to be made.

We have an extensive network of funding contacts, and are therefore well placed to introduce you to other potential funders, additional to the government support schemes.

Project management

In most cases, funding will be needed rapidly, and management will need to give their full and undistracted time to focus on managing the actual business through this period. With our significant experience in project managing the funding process and liaising with funders we can ensure the process is completed as quickly as possible with minimum interruption to your business.

Funders are receiving a significant volume of applications therefore ensuring the funding application includes all the relevant information required at the outset to avoid delays and being ‘pushed to the back of the queue’. An application from MHA Tait Walker will land more favourably with funders as they will acknowledge and appreciate that we have reviewed/compiled the information first.

Other specialist advisers

We can involve specialists across the firm, such as VAT, as well as our corporate teams who can provide assistance with management accounts and management information requirements.

Whilst we have set out the details of our service proposition, the key point to note is we have a flexible approach, and we will consider carefully the requirements of each individual business.

We have set out below a range of services and associated scope of work for guidance purposes only and to reflect a typical client request, but none are set in stone and each are flexible dependent on the situation. For example in some cases the full scope will be required, in others only elements of the scope will be required. We will tailor our pre-agreed fee to the needs of each business.

ServiceScope
High level review of the financial projections prepared by management1. Guidance on a suitable financial model structure
2. Ensure the key assumptions made in the projections are clearly stated
3. Review of the mechanics of the model
Note: our review would not constitute an audit or financial due diligence
Preparation of financial projections and supporting documentation
1. Preparation of 2 year monthly integrated P&L, balance sheet and cash flow projections incorporating the impact of COVID-19
2. Preparation of sensitivity analysis if required by funders
3. Summarise the key assumptions provided by management
Funding Application Business Plan1. Assisting management to incorporate the financial forecast into a funding application Business Plan
2. Compiling commentary, financial and non-financial in support of the funding application
Funding support1. Review recent trading and projected requirements to advise on a suitable funding structure
2. Introduce management to potential funders (including government funding support such as CBILS or CCFF)
3. Project manage the funding application process if required

Our fellow MHA member firm, MHA Moore & Smalley, have summarised this information in a factsheet.

Contact us

If you would like to discuss any of the points further, please contact Lee Humble at lee.humble@taitwalker.co.uk.

This article originally appeared on MHA Moore and Smalley’s blog.