Relaxation of Information Requirements

The UK’s seven largest small business lenders have relaxed their requirements for applications under the existing Coronavirus Business Interruption Loan Scheme.

With the intent to speed up the provision of finance to small and medium-sized businesses under CBILS, seven SME lenders (Barclays Bank UK, Danske Bank, HSBC, Lloyds Bank, NatWest, Santander and Virgin Money) have stated that rather than requiring businesses to provide forecasts and business plans to support CBILS applications, lenders will now rely upon their own information.

A joint statement from the lenders and UK Finance proclaimed: “… lenders will only ask businesses for information and data they might reasonably be able to provide at speed and we will not require the provision of forward-looking financial information or business plans from businesses applying for CBILS-backed lending, relying instead on our own information to assess credit and business viability.”

Barrons Comment

We wholeheartedly support any effort to make the CBILS application process easier for business owners, so long as the ease with which applications can be made is supported by positive outcomes from the review process. Time will tell – Government has clearly exerted pressure, when the full details emerge of the process Bank’s will follow we may be able to take comfort…

We have our concerns however that the preparation and formulation of forecasts and plans is not simply cast aside by business owners. We think it is an invaluable planning tool…

  • Whilst the forecasting process was a pre-requisite for the application, we have always believed that the current business challenges faced by owners merited a period of reflection
    • Upon the immediate impact of COVID-19, its expected duration upon the business model and the nature and extent of actions to be taken by owners to best protect a hitherto viable business emerge from the international crisis intact and able to trade freely in the future.
    • Business confidence is low, panic levels are high and the ability to assimilate all information and factors that can influence future performance is difficult to summarise.
    • Which is exactly what a forecast produces, a black and white picture of what has happened, is about to happen and needs to happen to protect the business.
    • A picture that the owner can assess, alter and change outcomes.
    • A yardstick to review in moments of concern that inevitably arise under such pressure.
  • The forecast will assist owners value the cash support gained from:
    • Receipt of eligible grants and rate reliefs;
    • Furloughing of employees under the Job Retention Scheme;
    • Taking capital repayment holidays;
    • Taking advantage of the VAT deferral scheme;
    • Entering into Time to Pay arrangements (TTP’s);
  • Ultimately, collating all the above will inform the owner:
    • What finance is needed to be injected;
    • Whether taking on such debt finance is the right solution for you at this time – do not forget, this is a loan and it has to be repaid – how does that impact your business in the future?;
    • And if it does not add up, repeat the above until you find the permutation that does – which may well include needing to look at a restructure of the business model itself!

So, just take a moment to consider what forecasting delivers as an outcome, it might just help you save your business.

Barrons has put together a helpful guide to running your business during the coronavirus crisis.