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SMEs running on empty as CBILS deadline looms

by LLB Finance Reporter
24th Sep 20 12:00 pm

Bounce Back loans used by SMEs are running low, according to business lender MarketFinance. Their research found that SMEs are aware they can get more HM Treasury support by applying for larger loans through the Coronavirus Business Interruption Loan Scheme (CBILS) but did not know the deadline was end of this month.

Over 1.2m (39%) SMEs took on a Bounce Back loan to pay their suppliers and bolster their business, however they only have an average of £9,106 remaining of their Bounce Back loan and the majority expect this will run out later this month. Promisingly, 6% have already repaid their Bounce Back loan.

The CBILS initiative will conclude at midnight on 30th September with applications submitted before this deadline being valid for processing until the end of November. The majority of SMEs (77%) are aware of the larger loan scheme, CBILS, and 68% know they can refinance their Bounce Back loan using that facility.

The MarketFinance insights indicate that most SMEs (76%) would be keen on having a CBILS facility ‘on ice’ in case they need it later in the year in anticipation of larger bills, taxes due towards the end of the year. However, critically, almost two-thirds (63%) aren’t aware of the deadline by when they should apply for this.

The research also found that 77% of SMEs believe they will only hit 50% of their 2019 revenues. Two-thirds are still waiting to be paid for work they did pre-lockdown amounting to £33,906, on average – an improvement from June 2020 when they were waiting for £148,917.

Looking ahead to the end of the year, they don’t anticipate a festive rush. Over half (56%) believe seasonal demand will be lower than last year owing to the ongoing impact of Covid-19.

SMES are fearful of more disruptions as 2020 draws to a close. Two-thirds (65%) reported a second mass lockdown as a cause of major concern.

On Brexit, two-thirds of SMEs believe that a no-deal exit presents huge risks for their business. Chief among these are having an available workforce, not having the information to guide them on how to do business and the impact on supply chains at borders.

Anil Stocker, CEO at MarketFinance said, “The Bounce Back Loan Scheme (BBLS) was a good short term fix for SMEs. It provided the necessary support during the lockdown but looking ahead, the CBILS cash will provide the impetus to do more.

“It’s essential that businesses start looking beyond simply survival and begin evaluating how they can adapt their business to these Covid-conditions. There might be new ways to change the business model and get growth going again. Securing government-backed funding now, before the deadline, is an opportunity for businesses to access the working capital they need to build for the longer term. The idea of these being “unprecedented times” has been thrown around a lot this year. Initiatives like the CBILS offer similarly unprecedented access to fee and interest-free funding – but only for a limited time.”

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