Guidance on applying for CLBILS and CBILS

The Coronavirus Large Business Interruption Loan Scheme (CLBILS), aimed at businesses with turnover up to £500m,  will become available later this month and the Coronavirus Business Interruption Loan Scheme (CBILS), aimed at businesses with turnover less than £45m, is already available through participating lenders.

Both schemes are designed to help businesses which are experiencing lost or deferred revenues, leading to disruptions to their cash flow. CLBILS accredited lenders can provide up to £25m funding and CBILS accredited lenders can provide up to £5m funding, with both schemes offering a wide range of products and being supported by an 80% government-backed guarantee.

Accredited lenders include high street banks, asset-based lenders and specialist finance providers.

To be successful the borrower must demonstrate that the provision of finance will enable the business to trade out of the short-to-medium term difficulty caused by the Coronavirus pandemic. This requirement means that qualifying companies will need to assemble sufficient information to demonstrate a viable business case to the lender. As with any funding application there will be certain features which will maximise the prospect of success.

 

CBILS Application Pack 

Given the volume of applications likely to be received by lenders over forthcoming months it is imperative that the application submitted includes all the information required by the lender’s relationship and credit teams.  Following discussions with the main lenders we would recommend any application includes the following information (together with the lender application form if available):

  • Business Overview including a brief overview of the business, management team and the effect of the Coronavirus pandemic on the business and the sector in which it operates.
  • Funding Requirement including the type, quantum and term of the funding facilities required, together with any other terms considered relevant to the lender. It will be important to ensure there is enough headroom to get through the short-to-medium term period and ensure the proposition is consistent with the future cash generation and debt serviceability of the business.
  • Historical and Current Financial Information demonstrating a previously profitable and cash generative business (excluding any exceptional items), to include current management accounts, the last two years statutory accounts and an explanation of any material exceptional or one-off items.
  • Short-Term Cashflow Forecast (3-6 months) showing the weekly cashflows over this period based on agreed assumptions, and taking into account management actions and government Coronavirus support options.
  • Medium-Term Projections (2-3 years), incorporating an integrated Profit & Loss, Balance Sheet and Cashflow and factoring in the revised assumptions, mitigating actions being taken and how the business can begin to repay the required funding over the proposed term.
  • Existing Borrowings of the business.
  • Security Position proposed by the borrower and a summary of this security.

We would recommend, where possible, your incumbent finance provider is approached in the first instance. 

 

How Isca Ventures can help

Isca Ventures specialises in debt advisory and raising finance, as is evident from the number of successfully completed transactions over recent years and our relationships with finance providers. We can assist in the following areas:

  • Feasibility. Following an initial consultation we will give you our opinion quickly regarding the appropriateness of CLBILS, CBILS and other funding options for your business, together with how any funding should be structured.
  • Finance Provider.  We have an extensive network of contacts in the banking and wider corporate finance market, including relationships with the accredited CLBILS and CBILS lenders. We would choose the right lender(s) to match your funding need and utilise our relationships with these lender(s) to ensure your application is considered quickly.
  • CBILS Application Pack.  We have lender accepted templates and financial models to cover the main areas required in the funding pack and can proactively assist the management team put together the information required, specifically the financial projections and cashflow forecasts. Given our track record lenders would also put more weight behind information which has been vetted by Isca Ventures.
  • Security Position. This is proving a contentious area to date, with some accredited lenders not requiring any personal guarantees and others requiring an element of personal guarantees.  Whilst primary residential properties cannot be requested by lenders as security under these loans we would aim to minimise or eliminate any further personal guarantees by selecting an appropriate lender and form of finance, together with considering alternative security for the lender.
  • Negotiation of terms. We have the knowledge and experience to advise on and assist with the negotiation of reasonable terms for such finance.
  • Due Diligence. We can assist with any further internal or external due diligence required by the finance provider (if any), including any sensitivity analysis required on the financial projections.  
  • Project Management. We would project manage the entire process, leaving you with more time to focus on other management concerns during this difficult time. 

We are confident that our expertise and recognition within the local corporate finance market will enhance the likelihood of you securing the CLBILS, CBILS or alternative funding you require. Our fee would typically be paid from the funds we were able to raise and we would not charge any fee if we were not successful in raising the funds for you.

Further background to these schemes and other Government support initiatives for business during the Coronavirus pandemic can be found on the following link - https://www.gov.uk/government/collections/financial-support-for-businesses-during-coronavirus-covid-19.  Within the CLBILS guidance the website states ‘Once this scheme is launched, there is likely to be a big demand for facilities’. As such for those interested in applying for a CLBILS loan later this month we would recommend putting the funding pack together and commencing early dialogue with the potential funders, to ensure a compliant application can be submitted on a timely basis. 

Should you wish to discuss with a member of the team please contact partners@iscaventures.co.uk or any of our senior team directly.

Date: April 2020