CBILS Success Story: a loan for a business with too many commitmentsPublished on 13th November 2020 2020-11-13T12:00:00+00:00
Funding a lifeline for a linen supplier
TL:DR: When a specialist linen supplier was struggling to keep their business afloat, their bank rejected an application for CBILS funding because the business was already high geared. We found a way to provide £250,000 with CBILS funding.
Urgent update: The government has announced an extension to the deadline for CBILS applications, which will now remain open until January 31st. Don’t miss out on the government-backed funding you must have - call us now.
Our client was a business providing linen - tablecloths and napkins - to restaurants, hotels and events caterers. The lockdown came as a disaster for their business - because although they were allowed to trade, their customers were not.
“Covid meant that overnight we went from working at capacity to not working at all. When the lockdown started to ease, things were a little better - but the hospitality industry was cutting costs wherever it could and linen was one of them.”
The two partners had built up their business over the years and had established a long list of clients across North-west England. It was a steady business - until the lockdown forced their customers to close.
The owners went into survival mode, stopping any unnecessary expense and taking full advantage of the government furlough scheme to staff. They applied to their current lenders for a payment holiday - but with no work being done and no income coming in, it would not be enough to keep the business afloat.
The business went to their bank to ask about funding from the government schemes.
CBILS vs Bounceback loans
Both Bounce Back Loans (BBL) and CBILS are government-backed schemes which were set up to support to businesses across the UK that were experiencing revenue losses, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak.
The actual funding is provided by high street banks and other lenders on a commercial basis, although the government will support the loans, which should allow businesses which would otherwise fail lenders' affordability criteria to secure the funding they need.
CBILS can provide loans of up to £5million, and have recently been extended to repayment terms of up to 10 years with nothing to repay for the first 12 months. As a large-scale funding product, they can take time to arrange - when the scheme was announced back in April, delays of a month or more were common. However, this has reduced as the banks and other lenders providing the schemes have found their feet.
Interest rates for the scheme will depend on the lender but are, however, uncapped.
The Bounce Back Loan Scheme (BBLS) was introduced to allow smaller businesses to access finance more quickly during the Coronavirus outbreak. The scheme is designed to help small and medium-sized businesses borrow between £2,000 and up to 25% of their turnover, and the maximum loan available is £50,000. It is designed to be faster to access than the government’s CBILS initiative, but the big difference is the interest rate – which, unlike the uncapped rates offered by some lenders under CBILS, is capped at just 2.5%. The length of the loan is six years but early repayment is allowed, and without early repayment fees.
The funding that could save our client's business?
The partners believed that a Bounce Back Loan would be insufficient for their needs - but their bank was reluctant to help with progressing an application for CBILS.
“The problem was that we had already borrowed heavily to move the business forward - we had needed new laundry equipment and vehicles at the end of last year. We thought we would be investing to make the business more profitable - instead, the bank gave the impression that we had borrowed more than we could afford.
They refused to lend us any more - even under CBILS.”
They turned to us at Rangewell instead, and our Covid Crisis Funding Team went to work.
We looked at the scale of their financial commitments and saw that the scale of their business and their current commitments would require a loan of £250,000 if they were to get through a prolonged lockdown.
The solution we arranged
We looked at the business its current funding and saw that the main reason for their bank's refusal to lend was the fact that their current lending was at the limit of their credit assessed by the bank.
We saw that the solution would be to apply for funding with another bank.=
We found another lender with a more flexible approach to lending limits and arranged the funding required.
The funding Rangewell secured
£250,000 over 60 months 4.9 % interest
Repayment holiday for the first 12 months
“We have seen many business owners, including our customers, forced to wait for the funds they needed. We had the cash we needed to stay afloat, with the funds in our bank ready to call on - and with no repayments to make in the first year.”
Rangewell finds the financial solutions that your business needs
The Rangewell Covid Crisis service is easy to use - and lets you talk directly to a funding expert to get the solution that you need.
Just call us and one of our Business Funding Experts will be able to discuss your options, and work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present.
We can help you see if a CBILS or Bounce Back Loan might provide the answers you must have and streamline your application - or whether there is another form of funding which could provide a better answer for your particular circumstances.
Then we will search the entire lending market to find the most appropriate lender, and to make the application for the loan you need.
Calling us saves you valuable time - and it could help you save your business.
Keeping your business afloat with help from Rangewell
- Individual arrangements tailored to your circumstances
- Adverse Credit – no problem
- Repayments geared to your turnover
- Expertise in funding for your sector
- Bounceback and CBILS expertise
Talk to Rangewell – the business finance experts
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