As of August 9th, just over 59,000 businesses have been approved for the CBILS facility totaling £13.4bn – a sum moving ever so slowly considering the majority of SMEs make up an overwhelming population of the 6 million businesses in the UK economy. Although financial institutions, the government, and the British Business Bank have collaborated to provide access to different forms of business credit – is there more than can be done to support neglected businesses that are promising enough despite being at the pre-profit stage and even seasoned businesses still trying to turn the corner?
As CBILS nears expiration by September 30th, business lending specialists have an obligation to help maximise the chances of successful lending for their respective business clients, provided there’s a strong case to be made for participating lenders’ consideration.
While the exact contents of a funding proposal will vary and tailored individually, any business needs to have clear answers to these credit queries:
- What’s my purpose for funding, and do I have a justifiable plan to demonstrate how the principal loan and interest are repaid?
- As well as having cash flow projections well into the next 18-24 months, do I have a worst-case scenario addressed in case of a second spike arising from growing COVID cases?
There’s no doubt these are unprecedented times, but it goes without saying that it’s worth covering all the bases that lenders will expect to see in your proposal for emergency lending.
Here are five tips for businesses putting together a CBILS proposal:
- Your business plan should have a clear executive summary to show lenders what the requirement is, what the funds will be utilised for, and why it makes commercial sense to lend to your business.
- From experience, the most successful business plans include projected turnovers and net profits based on proof of concept of products/services, the backlog of work already secured, the strength of management teams, quality of client base, steps being taken to shore up balance sheet – just to name a few. This among many other countless factors reassure lenders of your ability to weather the pandemic.
- It’s a good idea to include your desired loan amount into a cashflow forecast to demonstrate how your business performs financially. If anything, this makes a good impression of your financial planning and what your cash balances would look like to a potential lender reviewing your proposal.
- Further to the points made, your proposal needs to be based on realistic assumptions as it can be frustrating and time consuming for lenders who will ultimately end up dismissing your case at first glance.
- Equally, your commercial proposal needs to be very specific and tailored according to the lenders’ specifications. Every lender has a unique credit offering which is why criteria differ from one another. As such, your plans for funding should reflect individual lenders. This is where specialist debt advisors make a difference!
Beyond the 105 CBILS accredited lenders preoccupied with emergency loans, there are many specialist lenders that have an appetite to cater to pre- and post-profit businesses seeking to maximise their market share. This is where knowledgeable funding advisors match your growth objectives with the most optimal lending solutions in a very fragmented debt market.
Would you like to know more?
FundingSmiths is an independent credit partner for growth-driven SMEs seeking structured working capital solutions. Our focus is to constantly think ahead and not just settle solving your immediate commercial objectives. If you would like to discuss your growth plans in more detail, we’d love to hear from you. Please email email@example.com or book a call to discuss further.