The Coronavirus Business Interruption Loan Scheme (CBILS) was announced by the government in March to offer support to businesses experiencing struggles during the ensuing UK lockdown. Since then, companies have borrowed over £8 billion from CBILS accredited lenders to help them financially during COVID-19.

Despite the support CBILS has offered many firms, some companies have been unable to access finance via this route. CBILS has an approval rate of 51%, indicating that nearly half of applicants are left without the financial help so many desperately need during this time and with the challenge of finding options elsewhere in an uncertain economy.

Luckily, even if you are rejected following an application for CBILS, it doesn’t mean you are stuck. Instead, it is essential to consider alternative solutions and re-examine your application. We have put together our tips below for what to do after being turned down the CBILS, so you achieve the financial support you need.

• Re-examine your application
• Consider alternative lenders
• Utilise other finance types
• Get guidance from experts

Re-examine your application

When it comes to finance, the key to success is making sure you have created a winning application, and it is no different with CBILS. When you receive a rejection from a lender, pay close attention to why you have been rejected. If a reason hasn’t been given, make sure you ask so you can learn from it.

Once you know why your business was rejected, re-examine your application and consider areas that could be improved on. Some of the more significant eligibility criteria will be non-negotiable, but there will also be some requirements that can be met through careful presentation of your business case and supplying additional information.

When you feel like you have a watertight application, re-apply through alternative lenders, but be wary that most lenders are focused on their own clients first. Make sure you have provided all the relevant information and addressed the common issues that can appear in CBILS applications so that you are better situated on the road to success.

Consider alternative lenders

When you make an application for CBILS, this will have been sent to your chosen lender, normally your own bank. If you get a rejection, this comes from that lender but does not necessarily mean that you will not be able to access CBILS via another route. While there are some basic criteria that businesses need to meet to be accepted for CBILS, some requirements may vary by lender, making it worth exploring different avenues.

High street and commercial lenders are generally not taking on new customers in the current climate, so if you have already attempted to apply through your bank, you may struggle to switch to another one. However, there are fortunately many different types of lenders offering the loans, including smaller and more specialist lenders.

These lenders tend to be more open in who they are willing to offer finance to, with the CBILS signalling new opportunities to these lenders. Due to this, they can provide funding in situations where traditional lenders may be opposed to doing so – such as if your business is deemed a higher-risk. You may face increased interest rates as a result, but these interest rates are likely to reflect the risk of your business.

Check the British Business Bank’s list of accredited lenders and make a note of any alternative lenders which may be a viable option for you and get in touch with them to find out if you could be considered.

Utilise other finance types

If you find yourself at a dead end with CBILS or if your business is simply not eligible, it may be time to consider alternative funding solutions. There are plenty of options out there for firms that can work to free up capital and enable you to overcome obstacles.

Asset finance

One form of funding which may benefit your business during its COVID-19 recovery is asset-based finance. Through this, you can release capital tied up in your business assets to reinvest into the company.

Assets can include – but are not limited to – invoices (which we will discuss more of in cashflow finance below), equipment, stock, machinery and buildings owned by you. This offers you some flexibility in choosing which assets you want to borrow against, with these assets forming the collateral for your loan.

Under the umbrella of asset finance is business mortgages. Taking out a mortgage or increasing your existing mortgage on your premises can unleash working capital back into your business in exchange for you making regular payments. Mortgages generally have lower interest rates but be sure to familiarise yourself with the terms of the mortgage, the maximum loan to values that lenders will give and make sure you can keep up with your repayments.

Another option is leasing and hire purchase. Instead of buying the equipment, you need outright, leasing can give you the equipment, plant and machinery you need by paying affordable regular instalments. Another branch of this is the sale and leaseback of said assets, but only those that have sufficient equity. This frees up cash for you to use elsewhere in your business, which can be vital in times of hardship.

There may also be certain business loans you can take out, using your assets as security if they carry enough equity. This can allow you to get a loan even if your business is typically deemed ineligible or you have faced rejection from CBILS.

Cash flow finance

One of the biggest problems firms face in troubled times, such as when profit and output are down, is a lack of working capital that can be used to purchase stock and materials, pay suppliers and fund staff wages. In order to survive and allow businesses to continue, companies must, therefore, find ways to keep cash flowing.

One such way is through invoice finance. With invoice finance, you can borrow against money owed to you from outstanding invoices, with lenders offering up to 90% of the owed money to you upfront. This saves you having to wait for payment from customers – particularly in times when they may also be struggling financially. However, you must be confident your customers will pay the owed debt to you within the time frame given by your lender, as it could otherwise leave you needing to source other funding.

An alternative is trade finance, which can be used if your business imports. A lender fronts the cost of imported supplies you need for any existing orders, allowing you to get the necessary stock and materials you need to fulfil those orders. This means you do not have to wait for payment from customers to unlock your orders and can increase productivity, rather than letting it be stalled by poor cash flow.

Similarly, there is supply chain finance which allows you to get the stock you need from suppliers. This effectively extends your payment terms to your suppliers whilst providing the option for your suppliers to get paid early, with a lender paying for stock purchases. You then repay this at a future date; usually at the end of the trade cycle when debtor funds have been received.

All of these options can inject cash into your business, allowing you to reinvest it wherever needed.

Get guidance from experts

Seeking sufficient finance for your business while dealing with the ramifications of the COVID-19 outbreak can be difficult, particularly if you have already experienced rejection from a CBILS lender.

If you need advice on your CBILS application or alternative funding solutions for your business, our team of experts are here to help. With experience across a range of business and funding types, we can guide you in the right direction.

Please call the team today for a free consultation or email [email protected].