Sheffield banker issues tips on applying for a business support loan

A Sheffield banker has issued tips for bosses applying for a government loan to keep their business alive.
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Tom Islip has handled several Coronavirus Business Support Loans and says he and colleagues are working hard to streamline processes to “get money out of the door quickly.”

CBILS loans were announced by the Chancellor to help companies survive lockdown.

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Since then they have been tweaked to make applying quicker and easier. They have no entry or exit fees and capital and interest charges are not applied in the first 12 months.

Tom Islip, Barclays relationship director Yorkshire, SME banking.Tom Islip, Barclays relationship director Yorkshire, SME banking.
Tom Islip, Barclays relationship director Yorkshire, SME banking.

Tom, a relationship director at Barclays in Sheffield who specialises in SMEs, said: “We understand people’s situation and we’re doing everything we can to help.”

It might take two to four weeks for a CBILS loan to land in a company bank account, compared to six-to-eight weeks for a similar product in normal times.

Here’s how to make it go smoothly:

Cash flow forecasts are key, says Tom. They should show 13 weeks of predicted incomings and outgoings and, crucially, highlight the gap in funding that the loan will be used to fill.

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“We have to document to the government what the money is going to be used for. Fifty per cent of your customers might be closed. We need to understand the assumptions and calculations and how it applies to the cashflow.”

You can apply for a bit more than calculations show in case forecasts are wrong.

“It’s very difficult to accurately forecast anything at the moment. An extra 20 per cent will be viewed sympathetically. At the end of the day we only want a customer to come to us once. But it must be justified. The loan isn’t to sit in bank accounts ‘just in case’.”

All viable businesses affected by Covid-19 are eligible - what does that mean?

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Viable basically means profitable - can you evidence you can afford the repayments?

Tom says firms should have their 2018 and 2019 accounts ready. And if 2019’s aren’t authorised yet then monthly management accounts will do.

“If you had a really good last quarter of 2019 we will look at that favourably.”

Bullet point your assumptions.

When do you predict you’ll be trading normally again? What percentage of bad debts do you think you’ll suffer?

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Security. CBILS loans are 80 per cent guaranteed by government, the business is liable for the rest and most provide some form of security.

A debenture is a standard piece of security which existing customers may have already lodged with the bank following previous borrowing. This will speed up the CBILS process. Otherwise, have something ready.

The CBILS is available to businesses affected by coronavirus (COVID-19) who:

Are UK-based and operate in the UK

Have a borrowing proposal that, if not for coronavirus, would be considered viable

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Require a loan to enable trading during short-to-medium term difficulty

Have a group turnover of up to £45 million

Can afford to repay the loan for a term up to six years.

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