A guide to getting a business loan during Covid-19 

Your business needs a government-backed loan but you don’t know where to begin. Funding Options works with 40+ lenders enabling you to make the best choice

The government’s CBILS and BBLS initiatives are helping SMEs across the UK to access a Covid-19 business loan. On November 2, the Government announced that the Coronavirus Business Interruption Loan Scheme (CBILS) will be extended until January 31 2021.

How do I apply for a government-backed loan?

Applications for the government backed loans schemes – including BBLS and CBILS — will be open until January 31 2021. Companies will have the option to repay their loans over 10 years via a “pay as you grow” initiative. If a business finds itself in “real trouble”, six-month interest-only payments and payment holidays are available.

Currently, there are over 100 accredited lenders providing finance to businesses through the CBILS scheme. Funding Options is partnered with 40 plus of them and you can use our platform to apply for a CBILS loan. The benefit of applying through an accredited partner like Funding Options is that a finance Specialist will help guide you through the process.

What do I need to apply?

Firstly, you must be a UK-based business to apply for government-backed support. For a BBLS loan the lender will ask you to submit a short online application form and self-declare that you’re eligible and your business has been adversely impacted by Covid.

For CBILS loans, you will be asked to self-certify and may have to provide the following:

  • Details – how much you want to borrow, what it’s for and the repayment period
  • Documents — management and accounts, business plan and assets information

The type of documentation you’ll be asked for will depend on the lender. You may still be able to get a CBILS loan even if you don’t have access to all of the above. To qualify for the CBILS, your annual turnover cannot be over £45m. If you’re applying to borrow £30,000 or more, you must not have been classed as a business in difficulty.

What are CBILS features and benefits?

CBILS loans of up to £5m are partially guaranteed by the government to encourage lending. It makes a Business Interruption Payment to cover the first 12 months of the loan’s interest payments, together with any lender-levied charges.

The borrower is always fully liable for the debt.

Fortunately, no personal guarantee is required for loans under £250,000. For those that exceed the threshold, a personal guarantee may be required at the lender’s discretion.

However, if this is the case, recoveries are capped at 20 per cent of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied.

Principal Private Residences (PPR) are exempt.

  • Loans of up to £5m
  • Government-backed, partial guarantee
  • Government covers first 12 months of interest payments
  • No guarantee fees for SMEs

What loan types are available through the CBILS?

Businesses are experiencing different types of challenges throughout Covid, which is why CBILS loans come in a few different forms. You can apply for:

  • A term loan – finance repaid in regular payments over a set period of time.
  • Overdrafts – a line of credit that can boost short term cash flow
  • Invoice finance – borrowing money based on what your customers owe
  • Asset finance – used to spread the cost of new business purchases

Can I convert my BBLS loan to a CBILS loan?

If you received a loan though the BBLS to cover working capital needs but require over £50,000, you may be able to take out additional funding through a CBILS loan — as long as the new funding settles the original.

Covid-19: Finding an alternative business loan

If you’re not eligible for one of the government’s Covid-19 business loan schemes, there are plenty of other options available. As well as partnering with 40 plus CBILS loan providers, Funding Options works with hundreds of lenders providing a vast selection of alternative finance products, including:

  • Unsecured business loans — finance of up to £250,000 with no security. Suited to businesses with no/few assets, don’t want to offer security or need finance quickly
  • Revolving credit — pre-approved funds with a rolling agreement. A good alternative to business overdrafts and often more accessible
  • Bridging finance — a type of short-term business loan designed to get you from A to B until you can pay it off or secure longer-term finance

Whether you’re looking for cashflow headroom, working capital finance, or funding for growth or assets, Funding Options can help. As well as mitigating the effects of Covid, the Brexit transition period is also fast approaching.

We’re here to support your business through the winter into spring — and beyond. To access funding, chat with one of our business finance specialists on +442039848571 or complete our quick form and we’ll get back to you.

Further reading

How to get a bridging loan quote