Updated: 9 December 2020
Earlier this week we were delighted to host our first webinar in partnership with the British Business Bank. Attended by our registered introducers, we discussed the overall impact of the Coronavirus Business Interruption Loan Scheme (CBILS), both across the country and through Funding Circle, and what the future holds for SME lending. For those that couldn’t make it, we’ve summarised the key insights and takeaways for you below.
SMEs have welcomed the coronavirus loan schemes
Matt Adey, Senior Economist & Director at the British Business Bank, provided some insight into how SMEs have used government lending schemes. To help businesses react, adapt and continue to move forward, there has been more than £60 billion lent through the CBILS and the Bounce Back Loan Scheme (BBLS).
This shows the key role that providers have played in getting funds out to businesses. More statistics on the scheme can be found here.
CBILS has helped business throughout the UK
Providing integral funding to businesses throughout the country, CBILS has reached all corners of the UK. In general, overall scheme uptake has mirrored the business population in each region, showing it truly has been a UK-wide approach.
It has helped a variety of industries, with the most scheme lending coming in sectors that have been impacted the most severely by Covid. These include wholesale and retail, construction, manufacturing, administrative/support and accommodation/food. The value of loans offered has exceeded the proportion of UK business in those sectors, showing that CBILS is getting to where it’s needed most. More information on overall scheme regional and sector analysis can be found here.
Funding Circle is the 5th largest CBILS lender
Thanks to the fantastic support of our introducer community, Funding Circle has helped thousands of businesses access funds through CBILS. As of 15th November, we’ve originated c.£1.35 billion, making us the 5th largest CBILS lender. We have also approved c.£1.85bn of CBILS loans, representing a c.24% share of the number of loans approved since we began participating.
In such a challenging period for businesses, the economy and the country as a whole, we’re incredibly proud to be playing our part in helping SMEs access vital finance. This level of lending would not have been possible without our introducers, so again we’d like to say thank you for all your hard work this year.
Key benefits of a Funding Circle CBILS loan
CBILS loans start at £50,001 and, depending on the introducer, your clients can borrow up to £350,000 or £500,000. Combining the unique features of CBILS with the fast, flexible service that we’ve built at Funding Circle, your clients can benefit from:
● Nothing to pay for 12 months
● Government pays the first year of interest
● No upfront or early settlement fees
● Rates between 1.8%-7.4% APR
● Terms from 2 to 6 years
● No personal guarantee required up to £250,000
Refinancing through CBILS
Your clients can consolidate any existing business loans or debt through the scheme. Consolidating these debts into one repayment can lower costs and make them easier for your clients to manage. Overdrafts, credit cards, existing business loans, cash advances, asset finance and more can be refinanced through the scheme.
If they have a CBILS loan already, either with Funding Circle or another provider, they can still apply for a second. However, they can only borrow up to 25% of their annual turnover across the two loans, up to a maximum of £5 million. Other criteria will apply.
Don’t miss the January 31st deadline
The deadline to submit new CBILS applications is 31st January 2021, so don’t miss out on referring your clients. We will be able to continue to make offers for a short period afterwards, providing the application was submitted by the end of January.
We encourage everyone to not leave it until the last minute. We are expecting high volumes and there will be a final date whereby we can process applications.
“Funding Circle helped us deal with the demand from SMEs”
Tom Brown, Director at PMD Business Finance, has worked closely with Funding Circle on CBILS to provide his clients with much needed finance. He had this to say:
“In March and April brokers were met with a demand of SMEs who were in need of help. Funding Circle were quick to start offering CBILS loans, which enabled us to have proactive and positive conversations with our clients. The speed that Funding Circle came to market was impressive, and we want to thank Funding Circle for their support.
Looking forward to next year, hopefully we can get back to some sort of normality. If SMEs, lenders and funders can work together in a resilient way then we can ride the storm of whatever 2021 brings.
What’s next for Funding Circle Introducers?
We want to continue to build on the success of our introducer channel throughout next year. Some of key areas we’ll be focused on include:
1) Team structure – We’ll be redefining how we structure our team internally to cater for a post CBILS world. Our plan is to focus on service improvements to the introducer market.
2) Technology – We’ll continue to develop and evolve the technology we utilise. The aim is to enhance our offering to you and your clients.
3) Building closer relationships – Using the valuable feedback that we’ve received throughout the year, we want to build closer, reciprocal relationships with our introducers in 2021.
What’s next for SMEs and government-backed lending?
Matt Adey finished off the webinar with some insights into what the forecast looks like for SMEs in 2021. The recent government spending review suggests the economic environment remains challenging. The latest forecast from the Office of Budget Responsibility published predicts that the UK economy will shrink by 11% this year and we will be well into 2022 before we see the economy return to pre-Covid levels.
While he expects that Covid will continue to have an impact on the economy through 2021, hopefully that impact will decline overtime as restrictions on economic activity can be relaxed.
CBILS and BBLS have been extended until the end of January and there are good signs of continued demand for those schemes. BBLS customers are also now allowed to top up their loan, if they have not already taken the maximum loan amount.
The Chancellor also announced there will be a successor loan scheme, although the parameters of that scheme have not yet been announced. As we move into 2021 it is clear businesses will continue to be impacted by Covid. We must continue to ensure they get the help they need to grow and help the economy to recover, over the long-term.
It’s important to remember that when taking a loan your business is liable for the full loan amount. The CBIL and BBL schemes provide a guarantee to the lender, not to the business.
All information is correct at time of publishing. While we want to help as much as we can, the information and documents found here are provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here.If you have any questions, please speak to your professional adviser or seek independent legal advice.
CBILS and BBLS are managed by the British Business Bank on behalf of, and with the financial backing of, the Secretary of State for Business, Energy & Industrial Strategy. British Business Bank plc is a development bank wholly owned by HM Government. They are not authorised or regulated by the PRA or the FCA. Visit british-business-bank.co.uk.