The coronavirus crisis has impacted British business more than we could have ever imagined. While the UK government’s support measures – especially the furlough scheme and deferral of VAT payments – have gone some way to preserving firms, the real test lies ahead as the support comes to an end and the economy fires back up again.
Although things have started to return to something representing normality, many businesses are still experiencing lost or referred revenues, leading to disruptions to their cash flow.
For smaller businesses across the UK, now is the time to act to prevent capital problems later down the line. It’s important to remember this won’t last forever, so it’s about survival and making sure your business is in as good a shape as possible on the other side of this crisis.
The good news is that, while VAT payment deferment has ended and the furlough scheme draws to a close, financial support remains for businesses affected by COVID-19.
The Coronavirus Business Interruption Loan Scheme (CBILS)
The Coronavirus Business Interruption Loan Scheme (CBILS) helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million.
The government guarantees 80% of the finance to the lender and pays interest and any lender-levied fees for the first 12 months. The scheme provides the lender with government-backed, partial guarantee against the outstanding balance of the finance.
Available to UK-based businesses with an annual turnover of up to £45 million, to access the CBILS you also need to prove that your firm would be viable were it not for the pandemic and has been adversely impacted by the coronavirus.
Shire Leasing PLC is accredited for CBILS via the British Business Bank and able to provide Asset Finance and Term Loan facilities to SMEs to support their investment in new and used assets.
What facilities are available under CBILS?
Not all lenders, including Shire Leasing, provide every type of finance available under CBILS. Shire Leasing has been accredited to supports SMEs with the following financial facilities:
- Term loans – Under the CBILS, businesses can take out a six-year loan. Shire Leasing is offering term loans from £50,001 to £200,000, with a repayment period of five years. In addition to the eligibility criteria outlined above, an applicant must prove it generates more than 50% of its turnover from trading activity.
- Asset finance – Shire Leasing is also offering asset finance from £25,000 to £200,000. The facility includes Sale and Leaseback/ Sale and HP Back, which enables a business to sell their equipment to Shire Leasing, often for the full invoice value paid. Shire Leasing then takes on ownership of the assets, and they are leased back to the business – or purchased back – over an agreed period of time.
What other facilities could help your business?
There are other financial facilities which fall outside of the CBILS which could help your business navigate these turbulent times.
Shire offers a broad range of asset finance solutions, tailored to meet the needs of each individual business that we support. The finance solutions which might hold particular appeal in the current climate include:
- Seasonal lease – With a seasonal lease, you can pay larger rentals for equipment during your more profitable months – which might be six months away – with lower repayments during less profitable periods, rather than paying a fixed, linear amount every month. It suits businesses that have clear seasonal peaks and troughs in their business levels/demand e.g. a seaside resort hotel.
- Low-start lease – This solution helps businesses to manage the cost of asset and equipment investments. Through a low-start lease, businesses can pay as little as £50.00 a month for the first 3 to 6 months, before regular payments start. Being able to minimise repayments right now could be an intelligent way of investing at a time where protecting cash flow is vital.
To find out more about any of the finance facilities above, get in touch today.
The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and industrial Strategy (BEIS). British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). Full details on CBILS eligibility criteria and the list of participating CBILS lenders can be found on the British Business Bank website.