SMEs running on empty as CBILS deadline looms

Bounce Back loans, the most popular HM Treasury support measure, used by SMEs are running low, finds the latest insights1 from fintech business lender MarketFinance. SMEs are aware they can get more HM Treasury support by applying for larger loans through the Coronavirus Business Interruption Loan Scheme (CBILS) but do not know the deadline is 30th September, tomorrow. 

Over 1.2m SMEs took on a Bounce Back loan to pay their suppliers (39% of SMEs did this) and bolstered their business by setting up ecommerce and online shopping channels (29% reported doing this) to attract new customers. 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. 

CBILS appetite 

The CBILS initiative will conclude at midnight on 30 September 2020 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 survey found 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 (end of September) by when they should apply for this. 

Ms Jo-Dee Loader, Managing Director of northwest-based retail supplier,  The Retail Factory commented: Our customers range from small corner shops to high street retailers, when the lock down came we were heavily impacted as orders dried up and payments were delayed. Our £50k Bounce Back loan helped secure the business but as shops are reopening and need retail essentials, orders are picking up. We turned to MarketFinance to refinance with a CBILS loan and also got a revolving credit facility of £250k, for our invoices, to ensure we have the cashflow to service the demand and growth we expect in the next year. We’ve already hired more staff and plan to expand the business.”

Anil Stocker, CEO at MarketFinance, commented: “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. Not having the cash flow to sustain businesses at the back end of the year, could be disastrous for many of these SMEs.”

“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.”

Financial well being 

Many SMEs (77%) 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 COVID19.

Future and Brexit

SMES are fearful of more disruptions as 2020 draws to a close. Two-thirds (65%) reported a second mass lockdown (as COVID-19 cases increase) leading to supply chains being impacted causing delays in sales and payments 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. (Q12)

MarketFinance is accredited to lend under the Coronavirus Business Interruption Loan Scheme (CBILS), providing term loans from £50,001 to £150,000 and revolving credit facilities from £50,001 to £5 million to UK SMEs.

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