As part of the Coronavirus Business Interruption Loan Scheme (CBILS) every UK company can apply for a loan of up to £5m. However, issues over eligibility and paperwork have left many businesses disappointed, says Debbie Boulton, a director at Bath accountancy firm Richardson Swift.
From speaking to our trusted broker contacts, we recommend that business owners talk to their existing bank, or finance provider (not the British Business Bank), as soon as possible to discuss their loan requirements and business plan with them. 
Ticking the right boxes
Arranging credit is often beyond the remit of any individual relationship manager, even if he or she is sympathetic and knows your company well. And, although having good rapport with your bank is still important, it’s the numbers that do the talking, regardless of the strength of relationship you have.
Banks and financiers will need convincing evidence that an SME has a real need for the money and a robust plan to repay it. Please be wary, however, if you are asked to secure your loan through a personal guarantee (PG). Under the CBILS policy, banks are prohibited to take charge over a borrower’s residential property and many banks will not take a PG when agreeing a loan under the scheme.
Our top five tips
The saying that “by failing to prepare, you are preparing to fail” has never rung more true. While each case is individual, your chances of success will be vastly improved by following these five key tips:
- Prepare a business plan. A detailed business plan is essential to any request for bank finance. Reams of figures are not enough – they must be presented in ways that the bank can understand and trust.
- Present your case. The bank will not only want to see detailed cashflow, profit and loss accounts, balance sheets and liquidity reports, it will want to be sure that you demonstrate the need for a loan and how it fits into your business plan to further the company.
- Do your research. Financial forecasts and business plans must be well-grounded, and banks will want convincing that firms understand their markets thoroughly and are realistic about their future prospects.
- Be accountable. If a loan is granted, there will be strings attached. For example, in some loan terms banks will demand oversight of the accounts every quarter. A regular covenant agreement is highly recommended.
- Good housekeeping. Businesses should have a strong grasp of their financials all the time, not just when they are seeing the bank. An increasingly popular option is for businesses to outsource their finance functions. We can provide clients with the equivalent of a virtual finance director and prepare management accounts, making it easy for us to assist them with credit applications and help them present their data should they need credit now or in the future. As part of this service, we can also identify areas of weakness and coach clients on how to answer difficult questions from their bank.
For further information and advice on accessing finance or Richardson Swift’s coronavirus business support services, contact Debbie Boulton on 01225 325580, or email db@richardsonswift.co.uk
