There is plenty of information in the public domain regarding the criteria for Coronavirus Business Interruption Loan Scheme (CBILS) loan applications.
Such criteria includes the business to be a viable lending prospect if it wasn’t for the coronavirus, solid financial reporting and forecasting information which shows the business can afford to meet its existing obligations/debts plus repay the CBILS loan if granted, as well as documented reasoning for the value applied for and what the loan is intended to be used for.
We understand that CBILS is not a facility which directors and business owners are able to use to convert personally guaranteed business loans and finance facilitates into an unsecured CBILS facility of up to £250k.
Directors and business owners therefore should properly consider the effects on the business if it is straddled with further debt, in particular, will this additional debt impact on the company’s ability to continue to honour personally guaranteed funding facilities and can the business meet its existing and new financial commitments moving forwards.
With a solid business plan and financial modelling, directors and business owners can make well informed decisions as to whether further finance is required, what amount is needed and if it is affordable.
As a firm specialising in Business Recovery and Insolvency, we would also encourage business owners and directors to seek specialist advice from a licensed and regulated insolvency practitioner to discuss statutory and non-statutory solutions before committing to any additional funding facilities (whether or not they’re personally guaranteed).
At ICS, our licensed and regulated professionals have over 40 years combined experience advising small and medium businesses in financial difficulty.